Covered Calif. Has $363M in Grants Remaining for FY 2014-15
After Covered California's first open enrollment period drew to a close last week, the exchange has about $363 million in federal grant funds left over to support the insurance marketplace over the next fiscal year, the Sacramento Business Journal reports (Robertson, Sacramento Business Journal, 4/18).
Officials have predicted that the exchange will be self-sustaining by 2015, when the Affordable Care Act will stop providing federal grants to state health exchanges.
However, exchange budget statements have not included a definitive plan for how Covered California will continue funding its operations at that time, and California law prohibits using the state's general fund to pay for the exchange (California Healthline, 2/10).
Details of First-Year Expenditures
During FY 2013-2014, several exchange operations ended up costing more than expected, including:
- The online enrollment program, which cost nearly $113 million more than expected;
- Administrative costs, which were more than $2.1 million more than expected (Sacramento Business Journal, 4/18);
- Enrollment activities, which cost about $2 million more than expected, largely because of more spending on marketing and delayed spending on community grants; and
- The Small Business Health Options Program, which cost nearly $860,000 more than expected (Covered California report, 4/17).
Yolanda Richardson, deputy CEO of the exchange, said the additional costs "allowed Covered California to launch on time."
For more information on the higher-than-expected costs of the exchange's online enrollment program, see today's Capitol Desk post.
However, other parts of the exchange were less costly than predicted, including:
- Service center operations, which cost more than $26 million less than expected, largely because of less hiring than predicted; and
- Plan management and evaluation, which cost nearly $2.5 million less than expected.
Overall, the exchange's operating expenses were about 16% higher than expected for FY 2013-2014 (Sacramento Business Journal, 4/18).
Details of Sustainability Plans
According to a report presented during an exchange board meeting last week, Covered California plans to move into a "sustainability" phase by the end of FY 2014-2015.
At that time, the exchange will transition from relying on federal funding to being sustained by an administrative fee that insurers pay for each policy sold on the exchange (Covered California report, 4/17). The fee is $13.95 per policy in 2014 and will increase or decrease in 2015 depending on the number of individuals who purchase plans (California Healthline, 2/10).
The FY 2014-2015 preliminary budget, including enrollment and revenue estimates, will be considered by the exchange board in May and June. Currently, the preliminary budget "assumes the $363 million in remaining federal grant funding can be used to continue to support establishment activities into 2015," the report states (Covered California report, 4/17).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.