State Obamacare Exchanges Experience Growing Pains

Originally published on July 10, 2015 11:24 pm

The states that set up their own insurance marketplaces have nothing to lose in King v. Burwell, the big Supreme Court case that will be decided by the end of June. But that doesn't mean those states are breathing easy.

With varying degrees of difficulty, all of the state-based exchanges are struggling to figure out how to become financially self-sufficient as the spigot of federal start-up money shuts off.

Here are dispatches from Minnesota, Colorado and Connecticut on this tricky transition.

Minnesota – Tough Politics

Even though Minnesota's exchange, MNsure, ran much more smoothly in its second year than its disastrous first, some Republicans opposed to Obamacare from the beginning hoped to do away with it this legislative session.

"This has been an abject failure from day one to present. If you're denying that, your head is in the sand," says state Rep. Nick Zerwas.

His colleague, Rep. Mary Franson, agrees: "We should have never gotten into the exchange. We should just move straight to the federal exchange and bypass the state of Minnesota."

Even the Democratic architect of the law that created MNsure wanted to dissolve its board and make MNsure a state agency.

In the end, lawmakers ended their session leaving MNsure intact. But they voted to ask the feds to allow Minnesotans to get tax subsidies for health insurance regardless of whether they shop on the open market or through MNsure.

The legislature also created a bipartisan task force to consider MNsure's future. Republican Rep. Matt Dean says those relatively small measures make a big point.

"The final agreement I think that we have going to the governor right now acknowledges that there's major trouble with MNsure, that the current situation is not sustainable," Dean said.

Democratic Sen. Tony Lourey helped create MNsure. He likes the idea of letting Minnesotans shop outside of MNsure and still get subsidies, but, he says, "I'm not particularly optimistic that it would be approved by federal officials. If it were approved, I think we would have to talk about then how do we structure the financing of the exchange."

He says it would be even more difficult to fund the exchange with far fewer customers unless they could bring in new money.

One option is to add a tax to all health plans sold, not just those sold on MNsure.

Meanwhile, with fewer people signing up for plans through MNsure than anticipated, revenue is way down. That coupled with federal money drying up by year's end has MNsure moving to cut $2.5 million from its budget over the next three years.

--Mark Zdechlik

Colorado – Glitches And Expenses

Colorado's exchange has cleared its political hurdles for the most part, but technical glitches and financial challenges remain.

Marc Drillings knows this all too well. He wanted to buy insurance on the Connect for Health, Colorado's exchange.

But when he went online to enroll, the system mistakenly showed that his monthly premium would be $800 for him and his wife, way higher than it should have been. He tried to fix it, he says, and his application got stuck in limbo for two months.

"You enter bureaucratic hell, where no one can figure out what's wrong, how to fix it, or who to even talk to get it done," says Drillings.

He's a chiropractor so he's used to dealing with insurance forms, but sorting it out took still took him at least 50 hours he said.

Eventually, he enrolled in a plan for about $300 a month.

As many as 10 percent of those who signed up faced such problems. Fixing them chewed up staff time and cost millions, says Kevin Patterson, the exchange's interim CEO.

"I think it's fair to say we do have a slight hit to the brand," Patterson says.

His predecessor, Gary Drews, points out the exchange's successes. He says its enrollment numbers are strong, and the state's uninsured rate fell from 17 percent to 11 percent. Still, Drews admits, the takeoff has been bumpy even in the second year.

"It's a little bit like trying to fly as you're putting the wings on," he says.

Colorado's exchange faced expensive technical fixes, leadership turnover and questions from state auditors about its financial controls.

Add to that the big whammy: $183 million in federal startup money is running out. So the exchange plans to tighten its belt and consumers will feel the pinch. Fees on premiums will go up next year.

"I don't know if it's sustainable," says Republican state senator Ellen Roberts, who heads a legislative oversight committee.

She says another big issue for Colorado is Medicaid. The state had a smoother signup process for Medicaid than many other states, and the exchange footed the much of the bill. Now the exchange is asking the feds to pick up some of those costs.

The exchange had bipartisan support, but Roberts said it's going to be hard to make the transition to self-sufficiency.

"Either we're going to try and make our best efforts to sort this out, or people will throw up their hands and walk away," she says.

--John Daley

Connecticut – Success At A Price

Connecticut's exchange did well enough in the first year that it is marketing its services to other states that are still struggling.

And generally, Access Health CT is having a smoother transition from startup to established business.

"The first two years, we needed a much bigger call center to be able to answer questions and talk about how to navigate our website and things like that. We needed a much bigger technology team," says CEO Jim Wadleigh.

The task ahead is to change and shrink the organization to match its new mission. Wadleigh says he is letting consultants' contracts expire and leaving some senior positions unfilled.

"All of our teams have gotten smaller," he says.

The exchange does bring in upwards of $26 million a year by charging insurers who sell individual and small group policies on or off of the exchange. That will be the biggest source of money going forward.

Selling its administrative services to other exchanges could bring in additional cash, too.

"We have had some conversations with probably about a half a dozen states at this point about what are some of those opportunities," he says.

But with more than $150 million in federal money gone and not coming back, Wadleigh has two goals. One is keeping consumer prices as low as they can be and the second is keeping customers satisfied with the exchange's service.

"I think we're there," he says.

But that confidence comes at a price: Connecticut had to raise the assessment that insurers pay on each plan they sell on and off the exchange to fund smooth operations.

--Jeff Cohen

This story is part of a reporting partnership with NPR, local member stations and Kaiser Health News.

Copyright 2018 NPR. To see more, visit http://www.npr.org/.

ARI SHAPIRO, HOST:

A big Supreme Court case being decided this month could upend health care exchanges set up by the federal government. Thirty-four states that let the feds create their exchanges under the Affordable Care Act could lose big subsidies.

RENEE MONTAGNE, HOST:

Not so for the 16 states, plus D.C., that did it themselves. But those state-run exchanges face their own challenges.

SHAPIRO: Today, we'll hear from three states. We start in Minnesota where Mark Zdechlik reports politics threatened the health care exchange there.

MARK ZDECHLIK, BYLINE: Even though Minnesota's exchange, MNsure, ran much more smoothly in its second year than it's disastrous first year, some Republicans opposed to Obamacare from the beginning had hoped to do away with MNsure this legislative session. Among them, State Representatives Nick Zerwas and Mary Franson.

NICK ZERWAS: This has been an abject failure from day one to present. If you're denying that, your head is in the sand.

MARY FRANSON: We should have never gotten into the exchange, and we should just move straight to the federal exchange and bypass the state of Minnesota.

ZDECHLIK: Even the Democratic architect of the law that created MNSure wanted to dissolve its board and make MNsure a state agency. In the end, lawmakers went home leaving MNsure intact. But they want the feds to allow Minnesotans to get tax subsidies regardless, whether they shop on the open market or through MNsure. They also created a bipartisan task force to consider MNsure's future. Republican Representative Matt Dean says those relatively small measures make a big point.

MATT DEAN: The final agreement, I think, acknowledges that there's major trouble with MNsure - that the current situation is not sustainable.

ZDECHLIK: Democratic Senator Tony Lourey helped create MNsure. He likes the idea of letting Minnesotans shop outside of MNsure and still get subsidies, but...

TONY LOUREY: I'm not particularly optimistic that it would be approved. If it were approved, I think we would have to talk about - then how do we structure the financing of the exchange?

ZDECHLIK: Lourey says it would be even more difficult to fund the exchange with far fewer customers unless they could bring in new money. One option might be to add a tax on all health plans sold, not just those on MNsure. Meanwhile, with fewer people signing up for plans through MNsure than anticipated, revenue is way down. That, coupled with federal money drying up by year's end, has MNsure moving to cut $2.5 million from its budget over the next three years. For NPR News, I'm Mark Zdechlik in St. Paul.

JOHN DALEY, BYLINE: I'm John Daley in Denver. Colorado's exchange has cleared the political hurdles for the most part, but technical glitches and financial challenges can still trip it up. Case in point, Marc Drillings - he went to buy insurance on Connect for Health, Colorado's exchange. But when he went online to enroll, the system showed an error in his monthly premium, $800 for him and his wife. He tried to fix it, and his application got stuck in limbo for two months.

MARC DRILLINGS: You enter bureaucratic hell where no one can figure out what's wrong, how to fix it, or who to even talk to to get it done.

DALEY: He's a chiropractor, so he's used to dealing with insurance forms, but sorting it out took...

DRILLINGS: At least 50 hours.

DALEY: And eventually, he did enroll in a plan for about $300 a month. But as many as 10 percent of sign-ups had such problems. Fixing them chewed up staff time and cost millions, says Kevin Patterson, the exchange's interim CEO.

KEVIN PATTERSON: I think it's fair to say we do have a slight hit to the brand.

DALEY: His predecessor, Gary Drews, points out the exchange's successes. He says their enrollment numbers are strong and the state's uninsured rate has fallen to 11 percent. Still, Drews admits, the takeoff has been bumpy even in the second year.

GARY DREWS: It's a little bit like trying to fly as you're putting the wings on.

DALEY: The exchange faced expensive IT fixes to the sign-up system. There was leadership turnover, and state auditors questioned its financial oversight. And the big whammy - $183 million in federal startup money is running out. So the exchange plans to tighten its belt, and consumers will feel the pinch. Fees on premiums will go up next year.

ELLEN ROBERTS: I don't know if it's sustainable.

DALEY: That's Republican State Sen. Ellen Roberts from Durango. She heads a legislative oversight committee. She says another big issue for Colorado is Medicaid. A lot of people signed up, but the exchange footed much of the bill. Now the exchange wants the feds to pay some of those costs. The exchange had bipartisan support, but she says it's going to be hard to make the transition to self-sufficiency.

ROBERTS: Either we're going to try and make our best efforts to sort this out, or people will throw up their hands and walk away.

DALEY: Chiropractor Marc Drillings says despite hassles he faced, he won't walk away.

DRILLINGS: If it works for 95 percent of the population, that's still an A.

DALEY: So for now, the state is sticking with the exchange. But its success depends on fixing its problems in year three. For NPR News, I'm John Daley.

JEFF COHEN, BYLINE: I'm Jeff Cohen in Connecticut where the exchange has gone from startup to established business, and it's even marketing itself to other states that are still struggling.

JIM WADLEIGH: The call center is built. The website is built.

COHEN: And there's less to troubleshoot, says Access Health CT CEO Jim Wadleigh.

WADLEIGH: The first two years, we needed a much bigger call center to be able to answer questions and talk about how to navigate our website and things like that. We needed a much bigger technology team.

COHEN: So, Wadleigh says that now means changing and shrinking the organization to match its new mission.

WADLEIGH: All of our teams have gotten smaller.

COHEN: And the exchange is bringing in its own money, upwards of $26 million a year. That's from charging insurers who sell individual and small group policies on or off of the exchange. And there's the idea of selling its administrative services to other exchanges, too.

WADLEIGH: We have had some conversations with probably about a half a dozen states at this point.

COHEN: But with more than $150 million in federal money gone and not coming back, Wadleigh's got to keep squeezing his organization, and he's got two goals - one, keeping consumer prices as low as they can be, and two...

WADLEIGH: Continue to maintain the level of service that our customers have come to expect.

COHEN: And he's optimistic.

WADLEIGH: I think we're there.

COHEN: But that confidence comes at a price. Connecticut just voted to raise the tax that insurers will pay on each plan. For NPR News, I'm Jeff Cohen.

SHAPIRO: And this is part of a reporting partnership with NPR, local member stations, and Kaiser Health News. Transcript provided by NPR, Copyright NPR.