The Colorado health benefits exchange board got permission last week from a special legislative committee to apply for a $43 million federal grant that it needs to move ahead with the work of creating Colorado’s exchange. But the approval was not a rubber-stamp formality; there was plenty of back and forth arguing. Republican lawmakers on the committee were not all convinced that the grant – or the exchange itself – was a good idea. The Colorado exchange has been a contentious fight from the get-go. Although last year’s legislature did pass Senate Bill 200 to begin the process of creating Colorado’s exchange, lawmakers who were unhappy with the bill established the special committee that has to approve all grant applications as the exchange creation process moves forward.
Kevin Lundberg, a Republican Senator from Larimer County, expressed his concerns about how the exchange will be funded once the initial federal grants are used up and no more are available. The exchanges are supposed to be self-funded (ie, no more federal grants) by 2015. And although the Colorado health benefits exchange board has said that they are working on the funding problem, according to board chairwoman Gretchen Hammer, they are “… not to the place where [they] have a full financial model created.”
The main argument in favor of creating the exchange last year was presented by former House leader and Republican Amy Stephens who noted that if Colorado didn’t create its own exchange, the federal government would do it for us. And although plenty of people who were opposed to the PPACA at the time felt certain that the Supreme Court would overturn the law, that did not come to pass. So in hindsight, Stephens’ impetus to get moving on a state-specific health benefits exchange that is tailored to the needs of Colorado was likely very good for the state. The alternative would have been a federally-created exchange, and it’s hard to imagine that being better than one created by and for Coloradans.
But Lundberg’s concerns are still quite valid. The problem of long-term funding – and the question of how many people will utilize the exchange – is something that will have to be solved in order to keep the exchange functional after the federal money is used up. There was a big push to create high risk pool health insurance programs in all 50 states as soon as the ink dried on the PPACA (no doubt this was a very good thing for people in states that previously had no high risk pool option at all), but enrollment was a lot slower than expected. The exchange has to be prepared for enrollment numbers that may be lower (or higher?) than anticipated, and make sure that financially the exchange is able to sustain itself regardless of the level of initial participation.
Although the long-term funding question is unresolved at this point, it would seem that the only viable option is to move ahead with the creation of the exchange. They have less than 18 months now to get everything ready to go for January 1, 2014, and it makes sense that the funding problem has to be worked out in tandem with all of the other administrative questions. If they try to fix the funding issues first, they may not be able to get everything else done in the time they have left. If the federal government is giving out grants to states working on setting up their own exchanges, it seems to be in Colorado’s best interest to take advantage of that and at least submit an application for the grant money.