Colorado exchange officials mull 4.5 percent user fee — higher than feds

By Katie Kerwin McCrimmon

Colorado officials are considering hiking user fees for the health exchange as high as 4.5 percent, a significant jump over the current 1.4 percent rate and well over the fees for the federal exchange.

“Obviously, the level at which we are currently at is not adequate,” said exchange board member Arnold Salazar. “In any configuration, we’re probably going to have to look at a rate increase. The question is whether we look at 3.5 percent or 4.5 percent.”

If Colorado’s exchange fees jump higher than the 3.5 user fees for those who buy on, calls to scrap Colorado’s troubled exchange and fold it into the federal exchange could grow significantly louder.

Colorado’s legislative oversight committee meets again tomorrow and both lawmakers and auditors are paying much closer attention to costs that keep rising at the exchange.

Exchange managers on Tuesday presented board members with various budget scenarios during a committee meeting. The board has not voted on any of the proposals yet.

But the exchange center in Colorado Springs has gobbled up cash, with expenses projected to be as high as $21 million this year. Exchange managers have hired a consultant to try to drive those costs down and renegotiate with contractors, or to find a way to get reimbursed for Medicaid clients.

But for the moment, there’s no clear path for cutting costs there.

“The call center from a cost perspective is obviously the biggest number,” said board member Davis Fansler. “It seems like a rate increase of some kind is inevitable.”

All of the budget scenarios call for some increases in user fees and a “broad market assessment” that hits health insurance customers including those who buy outside the exchange.

The most extreme scenario calls for user fees of 4.5 percent and an assessment of $1.80 per member per month on health insurance plans. The insurance companies have said they pass the fees along to customers.

A mid-level proposal calls for user fees of 3.5 percent and assessments of $1.80 per member per month. And the scenario with the lowest fees would come in at between 1.8 and 2.8 percent and a $1.60 assessment per member per month.
On top of user fees, the exchange currently is scooping up $1.20 per member per month on more than 875,000 health insurance customers across the state.

Overall spending at the exchange in future years under the various scenarios would range from about $33 million per year on the low end to about $54 million on the high end.

With federal grants and other sources of income for fiscal year 2015, spending is projected to hover around $75 million, a total that is far from sustainable.

Managers also presented new enrollment targets that call for significant increases in the number of customers over the next couple of years. This year’s sign-ups have totaled about 143,000. The projections call for numbers as high as 217,000 next year, 256,000 the year after and 295,000 in 2018. Failure to reach those targets could put Colorado’s exchange in financial jeopardy as well.

Drews told board members that he thinks the exchange can become financially self-sustaining, but only with considerable work.

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