Slavitt Defends Performance, Sustainability of State-Run Exchanges

On Tuesday, Acting CMS Administrator Andy Slavitt defended the performance and sustainability of the Affordable Care Act's state-run insurance exchanges, Modern Healthcare reports (Muchmore, Modern Healthcare, 12/8).

Background

Under the ACA, the federal government provided more than $4 billion to 17 states to help them set up their own exchanges. CMS can recoup funds found to have been improperly spent by the exchanges.

The ACA required the state exchanges to be self-sustainable by Jan. 1. However, several state-run exchanges, particularly those in smaller states, faced challenges posed by:

• Costly technology;
• Lower-than-expected enrollment; and
• Low revenue.

As result, three states -- Hawaii, Nevada and Oregon -- abandoned their exchanges and instead now use the federal government's exchange technology for enrollment (Armour, Wall Street Journal, 12/8). New Mexico, which had set up its own exchange, has relied on the federal government's exchange technology since the ACA's first open enrollment period (Howell, Washington Times, 12/8). HealthCare.gov, the federal exchange website, now is used by 38 states (Wall Street Journal, 12/8).

Slavitt Under Pressure in Hearing

During a House Energy and Commerce subcommittee hearing, Republican lawmakers pressed Slavitt about the federal funding given to the state exchanges, as well as their presumed lack of sustainability.

Rep. Tim Murphy (R-Pa.) noted that several state exchanges had "been turned entirely over to the federal exchange" despite a "whopping investment of taxpayer dollars." Murphy added that "countless" other state exchanges "are struggling to become self-sustaining" (Washington Times, 12/8).

GOP panel members also asked Slavitt about:

• CMS' oversight of the state exchanges (Modern Healthcare, 12/8);
• Misspent federal funding for the exchanges (Wall Street Journal, 12/8); and
• The potential for future financial struggles among the exchanges (Sullivan, The Hill, 12/8).

The lawmakers cited a Government Accountability Office report released in September that found some state exchange administrators said CMS failed to clearly define its oversight role or properly communicate with the exchanges (Modern Healthcare, 12/8).

Subcommittee members also pointed to an April HHS Office of Inspector General report that found some state exchanges might have misspent federal funding on operating costs (The Hill, 12/8).

Rep. Marsha Blackburn (R-Tenn.) said, "We are very concerned about the dollars that have been spent on these state exchanges, and we're concerned about the quality of the product."

Meanwhile, Democratic lawmakers dismissed the hearing as another example of Republican attacks on the ACA. Rep. Frank Pallone (D-N.J.) said, "The majorities' efforts are simply designed to hamper implementation and undermine the [ACA] regardless of the fact" (Wall Street Journal, 12/8).

Slavitt Defends Exchanges

Slavitt said "plenty of adjustments" have been made to ensure the exchanges' success (The Hill, 12/8).

In addition, Slavitt noted that CMS has recovered more than $200 million from the states' original grants. He added that the agency is in the process of recouping more, including about $1 million from Arkansas.

Slavitt also said the agency has denied federal funding for state exchanges 69 times this year (Attias, CQ News, 12/8). Further, Slavitt said CMS will not grant any further funding for states to fix problems with their exchange technology systems.

Slavitt ultimately defended the state exchanges, saying all of them have been functional and have helped reduce their states' uninsured rates to less than 10% (Wall Street Journal, 12/8).