Juice-Voxer Sarah Cliff muses over the substantial bills to which states running their own healthcare exchanges under the PPACA look forward:
The Affordable Care Act provided federal grant funding for states to get their new web portals up and running. The Obama administration doled out $4.6 billion in grants to states launching their own marketplaces.
But Obamacare also requires state exchanges to become self-sustaining by the start of 2015. That means every state exchange that will operate next year now needs to figure out how to pay their bills. Every marketplace needs to be able to pay staff (which sometimes number in the hundreds), maintain office space and continue running outreach campaigns to increase the insurance rate.
Ms. Cliff goes on to outline different strategies the states will use to offset their costs: fees on insurance companies, grants from various sources, and new taxes for the most part.
That’s just the tip of the expense iceberg. The states need to find the money to pay the increased Medicaid caused by the lurkers, those who qualified for Medicaid under the pre-PPACA rules but for one reason or another were not enrolled. No one knows how many of them there were or their state of health. That will emerge over the next year or so.
Additionally, the states will eventually be expected to bear their full share of paying for all of those enrolled in Medicaid in their states. No one knows how much that will be, either. It’s within the realm of possibility that the governors who elected not to participate in the healthcare exchanges could look like bloody geniuses. Time will tell.
I wonder if the insurers will attempt to get the federal government to bear the costs of the new state fees. My suspicion is that’s precisely what they’ll do. That will result in unforeseen unforeseen expenses.
Illinois, wisely, acknowledged that running a healthcare exchange website was beyond its core competency but not nearly so wisely assumed that the federal government would be much better equipped to do so. I have no idea where Illinois will get the money to pay its ever-expanding Medicaid bill. It can’t pay the bills it already has, the Democrats running the state legislature are unwilling to take the blame for increasing taxes any more than they already have, and Illinois is driving companies and individual taxpayers out faster than any other state.
Raising rates doesn’t always mean that you’ll raise revenues. That’s a lesson that Illinois’s legislators haven’t really appeciated yet.