Even as Connecticut officials work to ready systems for the advent of federal health reform, they are doing so with limited visibility on an operating budget – complicating matters with the January 2014 implementation of the Affordable Care Act.
Connecticut and other states want to have a full system in place by October 2013, the traditional enrollment period for companies that offer health insurance to their workers. Entering this October, the nascent Connecticut Health Insurance Exchange that would help buyers find insurance was still dealing with framework issues in advance of the knottier details for the ultimate system.
“Whether you consider that framework like a brick house or whether you consider it a house of cards, I think that’s really all we’re being asked to do at this point, because in fact we don’t know how it’s going to be funded, we don’t know how the exchange is going to be sustainable – we don’t know any of those things,” said Mickey Herbert, the former CEO of ConnectiCare Inc. who is among the architects of the Connecticut Health Insurance Exchange.
Once the Connecticut Health Insurance Exchange has used up its federal grants in design, launch and early operation, it is expected to become self-sustaining, deriving much of its budget from taxes on health insurer premiums, and possibly fees from other sources as well. In early September, the exchange hired as its chief operating officer Peter Van Loon, like Herbert a veteran of ConnectiCare and Aetna; and as chief financial officer Steven Sigal, who previously worked for Aetna, Travelers and PricewaterhouseCoopers. They join Kevin Counihan, the Connecticut Health Exchange’s CEO who helped create Massachusetts’ pioneering health system.
At present, planners lack a firm grasp on how big a budget their new leaders will have to work with. In August, the state received a $107 million grant to establish the exchange, but the finances in future years remain muddled.
“The big question is we have not seen a budget,” said Stephen Glick, president of Chamber Insurance Trust in Orange. “We have not seen anything financial behind this … and this question has been brought up across the country in other exchange discussions.”
“What the exchange really needs to do is have a two- or a three-year projected budget, because we are going to figure out how we are going to be able to finance this stuff,” Herbert said. “At some point, there’s only so much burden you can put on the insurance carriers. They are going to be paying the brokers; they are going to be funding the exchange operating budget; and yet they are going to be trying to put a product out there that’s going to be affordable to Connecticut’s citizens.
“We are really creating a situation in that there may just not be enough dollars to go around,” Herbert continued. “People may not be able to afford it; people may not be attracted to it; and if the exchange then can’t attract enough people, the problem becomes just all the more worse.”
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