Connect for Health Colorado board members consider raising fee on individual policies
Insurance costs for policies sold through Colorado’s health insurance exchange could be growing. Connect for Health Colorado board members, whom manage the exchange, are currently considering increasing a fee on individual health plans in order to raise money next year. The fee that is currently in place is meant to provide funding for the exchange’s operations, ensuring that it is a solvent business. Board members believe that the fee is too low, however, which may lead to financial complication in the future.
Exchanges have to find a way to be financially sustainable
The current fee stands at 1.4% and is imposed on all individual health plans sold through the exchange. The fee was intentionally set at a low percentage because the exchange has received some $200 million in grants from the federal government. Exchanges throughout the country received similar grants, but these funds were not meant to sustain the exchanges indefinitely. As such, exchanges must find ways to make money without the aid of the federal government, which typically means instituting fees on policies that are being sold through the exchange marketplace.
Fee could increase by as much as 4.5%
Board members of the state’s health insurance exchange want to increase the fee on individual health plans to 3.5% or 4.5%. The exchange is believed to be close to financial sustainability, but will need more funding before such a goal can be accomplished. A higher fee would aid in this endeavor, but it could place more financial strain on those that want to purchase coverage from the health insurance exchange. While the exchange will continue to offer affordable policies, some people may find the fee too high, barring them from making a purchase.
Board members had considered other ways to generate revenue
Increasing the fee on individual health plans is not the only thing that board members are considering. The board has also considered offering ancillary products through the exchange, such as vision coverage, as a way to generate more revenue. The exchange may not have enough resources to make this possible, however, which is why the board has focused so heavily on increasing fees.