By Katie Kerwin McCrimmon
Lawmakers today defended insurance brokers and don’t want Connect for Health Colorado to start selling other forms of insurance.
Sen. Ellen Roberts, R-Durango, grilled exchange CEO Patty Fontneau during a legislative oversight committee hearing today about whether she would consider selling other products from car insurance to life insurance. So far the exchange sells health and dental insurance and the board recently voted to add vision insurance.
Sen. Ellen Roberts, R-Durango, doesn’t want Colorado’s exchange selling other insurance products.
Exchange board members have been reluctant to divert from Connect for Health’s mission to sell health insurance, but Fontneau opened the door Thursday to life insurance.
She told Roberts she would consider adding it for small business owners, but only after working with brokers and advisory groups, and getting a go-ahead from the exchange board.
“As our small group (market) becomes more robust, often businesses purchase their group life when they purchase their group health,” Fontneau said. “Is it something that we would consider, that we would bring to the board? And the answer is, ‘we would consider it and bring it to the board.’ ”
The primary reason that exchange managers are considering selling additional insurance products is that they need to improve cash flow.
Exchange managers presented old financial projections to their legislative oversight board on Thursday, not the newest model showing that all people with health insurance in Colorado may have to pay $13 million in fees to keep exchange finances afloat next year and another $13 million in 2016. (Click here to read Fee to fund exchange would hit all Coloradans with health insurance.)
Under legislation lawmakers approved last year, exchange managers are allowed to charge insurance companies up to $1.80 per member per month to pay for the exchange. At first they were planning on charging about $1. Then that number climbed to $1.25.
Connect for Health Colorado CEO testifies before the legislative oversight committee.
“The general market assessment is needed for us to fund our ongoing operations. That is a key opportunity for us to build our reserves so we can be safe and financially sustainable,” Fontneau told lawmakers.
The exchange has been flush with federal grants that have allowed managers to spend as much as $177 million in taxpayer money now, but that spigot shuts off at the end of this year and the exchange is supposed to be financially self-sustaining by Jan. 1.
Asked after Thursday’s review meeting why she didn’t give lawmakers the most up-to-date financial models, Fontneau said she’s constantly doing new models. She said she’s not backing away from the “broad market assessment” that would impose a fee on everyone with health insurance, even those who get it through their employer or outside the exchange.
“We model every single week. We’ve remodeled since then,” she said, referring to the most recent model, which the exchange’s finance committee reviewed earlier this month.
Fontneau said she always has sought to have a diverse revenue stream while enrollments grow. She told lawmakers Thursday that as of Wednesday night, about 128,400 people have signed up and she reassured them that the exchange would meet its mid-level target this year of 136,300 sign-ups.
Fontneau told Health News Colorado that there is “no fat” to cut out of Connect for Health’s budget and that other states of comparable sizes are spending $40 million to $50 million a year, while Colorado has committed to spending no more than $26 million.
“If you want us to cut, we will cut from customer service and marketing and outreach. Those are our variable costs,” she said.
Along with defending brokers, Sen. Kevin Lundberg, R-Berthoud, wanted to know how many of the new enrollees were previously uninsured.
Sen. Kevin Lundberg, R-Berthoud, worries that Colorado’s exchange is undermining brokers and wants to know if the uninsured are really getting covered.
Fontneau said she could not answer that question. And when Lundberg said he wanted to be briefed on it in the future, Fontneau told him she could not answer him because the federal government doesn’t allow state exchanges to make previous insurance status a mandatory question.
She estimated that about half of the people who qualified for tax credits were previously uninsured, but said that figure is unreliable.
“Have we made an impact on our uninsured population? The answer is yes,” but we don’t have full data, Fontneau said.
The Colorado Health Institute and The Colorado Trust do a study every other year known as the Colorado Health Access Survey. Researchers ask Coloradans about their insurance status, but the next data won’t come out until 2015.
Lundberg reacted with frustration about the lack of information about the uninsured.
“So, is it working? Are we actually making headway? Guesses are not good enough.”
My guess is that, frustration or no, Mr. Lundberg is not especially concerned with the health care status of the people who might sign up for the exchange under the ACA. His concern will be with the potential threat to the profitability of private insurers and brokers. When I’ve met and spoken with Mr. Lundberg in years past, he came across as at least as right-wing-crazy as any other right-wing-crazy in the state. I’ve seen no recent evidence that I should change my assessment. Moreover, most of the frustration he expressed, as well the same frustration felt by Ms. Fontneau and others at various points along the ideological spectrum, could have been alleviated at the very beginning if Republicans had not insisted on a private-insurance-based model. Expanding current Medicare and Medicaid programs would not have required the reinvention of the health care wheel, and would have been more cost-efficient, but such expansion was politically impossible in the face of Republican intransigence, so the current model was the only politically feasible one. If Mr. Lundberg insists on blaming someone for flaws in the system, he should blame his own party.