Officials Unveil More Details Of Colo. Exchange Funding

A week after approving a tax on health insurance policies, Colorado officials are offering more details of their plans to fund the state’s health insurance exchange after federal backing runs out in 2014.

Last week the state’s exchange board approved, with broad support,  a 1.4 percent fee on all policies sold in the exchange. This week the board asked state lawmakers for the right to charge health plans up to $1.80 per member per month for up to three years to fund start-up costs.

That bill also asks for up to $5 million in state tax credits for insurers that contribute a like amount to the exchange. That’s one of the mechanisms currently used to fund Colorado’s high risk insurance plan, which will be shut down when the Affordable Care Act’s ban on denying coverage to people with preexisting conditions takes effect in 2014.

The goal is create multiple revenue streams and keep prices as low as possible for consumers. The board can create some of those streams, including some fees, on its own. Others require legislation.

The board thinks it will cost $22 million to $24 million per year to run the exchange. State law says the exchange can’t use any state tax revenue.

The state’s health insurance plans say they’re OK with the new fees and proposed tax credit.

“The idea of having a wide and broad funding structure for the exchange is important to carriers,” said Mark Reece, associate director of the Colorado Association of Health Plans. “This bill adequately meets that … assessment structure we’ve been looking for.”

Reece conditioned his organization’s support on additional details that remain to be worked out with the bill’s Democratic co-sponsor, Beth McCann.

Business groups, including the local chapter of the National Federation of Independent Businesses and Colorado Competitive Council, also voiced support for the bill, and for the exchange as a means of increasing coverage and competition in the state’s insurance markets.

Two consumer groups also testified in favor of the temporary per member per month assessment and tax credits for insurers supporting the exchange. No one testified against the bill.

No lawmakers expressed opposition to the bill upon its introduction, but no vote was taken. The committee hearing the bill laid it over to give its sponsor more time to work out details with interested parties.

This story is part of a collaboration that includes Colorado Public Radio, NPR and Kaiser Health News.