DENVER (AP) – Colorado’s health insurance exchange has doubled its estimate of how many will drop their policies.
Connect For Health Colorado projected in April that 13 percent of people would drop or not pay for policies this fiscal year. But the exchange has revised that estimate to about 24 percent likely to drop their policies, The Denver Post reported Tuesday.
Because Connect for Health Colorado collects a fee on every policy sold through the exchange, the new model expects revenue from that fee to drop from $7.9 million to $6.9 million this fiscal year.
Exchange chief financial officer Cammie Blais said the staff is using the higher drop rate in more recent models because that is how national figures are tracking.
The exchange has not calculated actual dropped policies for Colorado.
“We expect a much clearer picture by the end of summer,” Blais said.
According to the revised estimates, Connect for Health expects 35,800 of its 152,200 individuals covered with exchange policies this fiscal year to drop coverage.
The exchange’s new model, which was provided to the finance committee in June and used to calculate revenues in the fiscal 2015 budget by the full board approved last month, still has revenue exceeding expenses.
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So a $1 million drop would mean less net income is added to the exchange’s reserve funds. At the budget meeting, several board members expressed concerns that the exchange doesn’t have enough money in reserves.
The exchange expects to have $13 million in operational reserve funds this year, according to the June financial report. Connect for Health expects total revenues of $48.9 million this year and net income of $7.2 million.
The exchange is moving from a heavy reliance on federal government grants to being self-funding. The board in June approved $13 million in new annual funding for the next two years that will be raised from a $1.25 monthly assessment on small group and individual health insurance policies in the state.
Connect for Health also collects a 1.4 percent administrative fee on its policies. The fee could rise to as high as 3 percent by fiscal 2017.
Kaiser Health News contributed to this report.
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