UT San Diego: Health exchange projects deficit in 2015

Covered California unsure how it will bridge gap when federal funding ends

Covered California projects it will lose $78 million in the 2015-16 budget, and it is not clear how the health exchange plans to close that gap and become financially self-sustaining once federal grants run dry.

While the exchange says that it will increase revenue and trim expenses to bring its operating budget into balance, its budget documents make no definitive statements about how, exactly, it will reach financial equilibrium.

Exchange spokesman Dana Howard said in a recent interview that it is hard to estimate exactly how the exchange’s operating budget will work out because this is the first year that Covered California has operated.

“At this point, you’re talking about a forecast that was done without one enrollment having taken place,” Howard said.

Health exchanges throughout the nation, whether run by individual states or the federal government, are required to be self-sustaining.

Since its creation in 2010, the exchange has paid its bills with nearly $1 billion in federal grants. But, starting on Jan. 1, 2015, the Affordable Care Act forbids federal grants for health exchange operations. And state law prohibits dipping into California’s general fund to pay for exchange operations.

Continue Reading Here: http://www.utsandiego.com/news/2013/dec/29/covered-california-deficit-2015/

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