Insurance exchanges get federal approval, decide payment methods

Earlier this month, the Colorado Health Benefit Exchange reached a major milestone toward opening in 2013: conditional federal approval.

The exchange, a nonprofit, quasi-governmental agency responsible for creating and deploying a new virtual marketplace for health insurance, is one of six nationwide to receive federal approval.

The exchange submitted its application in early October to build the state-based exchange.

The group met Dec. 10 to discuss ways to find funding for the program, which will run on federal grants until 2015. At that time, the state exchange must be self-sufficient, because it receives no money from the general fund.

“We are building a new health insurance marketplace for Colorado that fulfills the vision established by Senate Bill 200,” said Executive Director and CEO Patty Fontneau. “Our planning has focuses on implementing an efficient operational model, flexible technology systems that can adjust to future needs and responsible financial practices that create a clear path toward long-term stability.”

Experts estimate that the annual budget for the exchange in 2015 is expected to be between $22 and $26 million – that includes the costs associated with technology licenses, upgrades and maintenance, operating the customer service center, supporting the navigator program, staff and office expenses.

The exchange’s finances will include three type so funding: transitional funding association with Cover Colorado, a health insurance program for low-income Coloradans with pre-existing conditions that is expected to end once exchanges are up and running; enrollment-based funds which will stabilize over time and other revenue sources like website advertising, grants and new product offerings. The state will have to approve the financing mechanisms.

The Colorado exchanges are not tied to the Patient Protection and Affordable Care Act, and will operate even if the act is overturned in Congress. The state created the exchanges in 2010 with Senate Bill 200, and has moved forward with implementation with money from the federal government.