Sarah Kliff: 'States Don't Know How They'll Pay for Year Two of Obamacare'

June 23rd, 2014 10:27 AM

Up a creek without a paddle. That pretty much describes the situation next year facing states that decided to set up their own Obamacare exchanges. And who is reporting this gloomy outlook? None other than one of the biggest media cheerleaders for Obamacare, Sarah Kliff of General Electric Vox.

Kliff delivers the sad news in a story appropriately titled, "States don't know how they'll pay for year two of Obamacare." And since almost all the states in question are Blue states, that also means their finances are already in bad shape. Here is Kliff playing a mournful dirge lamenting a massive Obamacare problem that seems to have taken her by surprise:

More than a dozen states decided to build new health insurance marketplaces under Obamacare. Now, they need to figure out how to pay the costs of running those massive websites.

The Affordable Care Act provided federal grant funding for states to get their new web portals up and running. The Obama administration doled out $4.6 billion in grants to states launching their own marketplaces.

But Obamacare also requires state exchanges to become self-sustaining by the start of 2015. That means every state exchange that will operate next year now needs to figure out how to pay their bills. Every marketplace needs to be able to pay staff (which sometimes number in the hundreds), maintain office space and continue running outreach campaigns to increase the insurance rate.

Oopsie. According to Kliff the states are now facing three bleak choices and one desperate but hopeful solution:

Charge insurers a fee

Most state exchanges plan to rely, in least in part, on charging health insurers a fee for selling coverage. So far, the fees set for 2015 range from 1 percent of the monthly premium in the District of Columbia and Vermont to 3.5 percent in Minnesota. Some states also charged fees in 2014, in order to begin generating revenue further in advance, while others are implementing them for the first time.

Which will make insurance premiums go up when the fees are passed along to the consumers. On to bleak solution #2...

Keep on using grant funding

States can't get new grants from the federal government to run their exchanges after 2015. But that doesn't stop them from using what's leftover from the grants they received in 2014.

"Leftover" federal money? When does that happen? Not much relation to reality there so on to the final bleak "solution."

Get money from the state

Some states are turning to their legislature to help foot the bill for the new insurance exchange.

Which is another way of saying "raise taxes." And now the hopeful solution...

One way to pay for an exchange: start a side hustle

Have a bake sale? Corner lemonade stand? Deal drugs?

Connecticut had one of the more successful Obamacare launches, and is now looking to consult with and sell software to states trying to get their own state-based exchanges off the ground.

So that takes care of Connecticut IF it works but what about the other states? Perhaps Maryland could have a clambake. Washington state could give apples to their DMV workers to sell to folks waiting on long lines. And Colorado is already dealing drugs so I guess that "solution" has already been found.

Meanwhile kudos to Sarah Kliff for at least giving us a heads up on the wheels falling off Obamacare despite her hope that "side hustles" could somehow save the day.