A new report outlines the key principles and various options for funding the operating costs of Health Insurance Exchanges mandated under the Affordable Care Act. Nevada’s Silver State Health Insurance Exchange describes methods other states are using or may use to finance day-to-day operations of a Health Insurance Exchange (HIX).
Exchanges start operation in October 2013 with the first open enrollment period, with enrollment in qualified health plans (QHPs) starting in January 2014. Federal grants are helping cover state implementation costs but the ACA requires that each HIX be financially self-supporting after 2015.
The report, Financing Options for the Exchange, recommends that financing mechanisms be evaluated based on seven key principles:
- Stability, reliability, and predictability regardless of enrollment level.
- Ability to encourage participation.
- Ability to minimize adverse market impacts.
- Flexibility to ensure resources over time.
- Sustainability to reflect the state’s objectives for the Exchange.
- Capacity for monitoring, evaluation, and accountability measures.
- Transparency to customers.
State have several possible revenue options for funding a HIX, each with different considerations:
- License and user fees levied on qualified health plan participating in the Exchange
- User fee on consumers or small businesses who buy insurance through the Exchange.
- Monthly or annual fees based on a percent of premium or Exchange enrollment.
- Assessment of all health insurers in the state.
- Appropriation from the state’s General Fund.
- Fees per user, license, or referral to dental, vision, or Medicare products.
- Advertising fees.
To read or download the full report, click here (PDF).