The Obama administration dropped its request that Rhode Island’s successful state-run Obamacare exchange fund just $4.6 million of its own budget after rumors cropped up that the state could opt to drop the exchange entirely instead of paying up.
Federal taxpayers are chipping in $59 million to pay for the operations of Rhode Island’s Obamacare exchange, HealthSource RI, through 2015. Federal officials had requested that Rhode Island contribute $4.6 million to the pot for operational costs, less than 8 percent of total federal funding, but Rhode Island’s state house and senate have both filed bills preventing the state from dedicating any funding to the Obamacare exchange.
But when reports began to appear that Rhode Island might drop its fairly successful state-run exchange and join HealthCare.gov instead of paying up, the Obama administration reportedly backed down, according to exchange director Christine Ferguson.
Ferguson told reporters Tuesday that the Center for Consumer Information and Insurance Oversight (CCIIO), a part of Obamacare administrator the Centers for Medicare and Medicaid Services, had reversed its demand that the state pay for any of its own exchange.
“With this pledge of cooperation and support from CCIIO, I believe that HealthSource RI will be able to continue and build on the progress it has made for Rhode Island with no state general revenue in fiscal year 2015,” Ferguson said in a statement Tuesday.
“CCIIO expects HealthSource RI to have a sustainability plan that will address how the Exchange will be funded moving forward,” Ferguson said. “We will be working closely with CCIIO on that plan.”
Rhode Island’s threat to cease running its own exchange is the most surprising turn of events given its success. Of the few states that attempted to build their own Obamacare marketplaces, only those with the most disastrous results have considered joining the federally-run HealthCare.gov. (RELATED: Oregon To Drop Its Disastrous Obamacare Exchange, Join HealthCare.gov)
But the funding problem continues to be an issue. The Obama administration has already spent $474 million on the four worst exchanges — Oregon, Massachusetts, Maryland and Nevada. Oregon and Nevada are scrapping their exchanges and joining HealthCare.gov; Maryland and Massachusetts have shut down their first attempt and are trying again with a different model.
Even functional state exchanges are struggling to stay afloat once federal funding runs out. While most state exchanges expected to be funded through fees on monthly premium payments, it’s not enough. Washington, D.C. has instated a tax on all health insurers to pay for the exchange, whether or not the companies offer Obamacare plans — which has top insurers threatening legal action. (RELATED: DC Insurers May Sue Over Obamacare Exchange Tax)
The Obama administration’s capitulation in the face of Rhode Island’s refusal to pay could indicate that federal taxpayers may be paying much more than Obamacare