Colorado Health Insurance Exchange Raises Fees

Editor's Note: In a story May 18 about health insurance exchange fees, The Associated Press misidentified a researcher from Georgetown University's Center on Health Insurance Reforms. He was Kevin Lucia, not Justin Giovannelli. A corrected version of the story is below:

DENVER (AP) - The board of directors of Colorado's health insurance exchange has raised fees that will be passed on to consumers as it and other states face decreased federal funding and struggle to predict enrollment figures.

The hike in administrative fees to 3.5 percent from 1.4 percent of premiums means a family of four paying monthly premiums of $1,000 would see its assessment more than double from $14 a month to $35.

Connect for Health Colorado chief executive officer Kevin Patterson said Friday they chose the middle of three options presented by staff, one that brings Colorado, which had had among the lowest assessments fees in the nation, in line with the federal exchange's fee.

"They didn't feel like it was the right time to go above what the federal exchange was charging," Patterson said. "There are some things we need to prove to the public."

Shoppers have encountered frustrating delays on the exchange. Patterson himself said he thought it took too long at 20 minutes for him to buy a policy on the site.

RELATED STORIES: Connect For Health Colorado Story Archive

Patterson was Gov. John Hickenlooper's chief administrative officer before being named Connect for Health's CEO last month. He is the exchange's third leader since it was established under the Affordable Care Act, and he said Friday he would like the job permanently.

A limited state audit report of Connect for Health in December said financial controls were inadequate and more than $30 million in payments and contracts lacked proper documentation or procedural controls. State lawmakers have called for broader reviews. Still, Colorado's problems have been less severe than those associated with other exchanges.

Deborah Bachrach, a lawyer and former Medicaid director for the New York State Department of Health who now advises states on federal health reform, said that while consumers now might be concerned by rising fees, the goal was to improve the exchanges' ability to enroll more people who need health insurance. Some states are already seeing more plans coming onto the market.

"More enrollees bring in more issuers. More issuers bring in more competition, which should bring premium costs down over time," she said.

Federal grants that helped more than a dozen states start their own insurance marketplaces are starting to run out, researchers Sean Miskell and Kevin Lucia of Georgetown University's Center on Health Insurance Reforms said in an interview Friday.

Many, like Colorado, are considering raising fees. Some, like Rhode Island, are requesting state funding, a step Patterson said Colorado is not taking. Others, like Hawaii and Vermont, are looking to cut costs by transferring some of their operations, such as online platforms, to the federal government.

Lucia said that when the exchanges began, officials could only guess how many people would enroll and where they should set their assessment rates. Now, after two enrollment periods, the facts needed to shape business decisions are becoming clearer.

"People always say the government should be more like private business," Miskell said. "But the flip side of that is, sometimes, private businesses fail."

Miskell said that with so much invested already in the Affordable Care Act, he is not concerned any exchange will fail.

In Colorado, Patterson's board on Thursday also increased a flat monthly fee charged on all private policies sold in the state from $1.25 to $1.80. That affects about 1.2 million policies.

Patterson added that his exchange, which currently gets no federal reimbursement for helping applicants sign up for Medicaid, was now seeking such support. As a first step, Patterson's staff must determine how many of the people who come to his assistance network, brokers, website and customer service center are advised they qualify and go on to receive public insurance.

Consultant Bachrach said Colorado is among several states that did not initially focus on the extent to which their exchange staff and technology would be working to help people sign up for Medicaid.

By Donna Bryson, AP Writer

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