The Colorado Obamacare exchange board approved a tax on all insurance carriers in the state Monday in order to fund the exchange’s ongoing operations once federal funding runs out.
The exchange will charge insurance carriers $1.25 monthly on each insurance policy sold in the state in order to generate an expected $13 million for the Obamacare exchange’s 2015 funding. (RELATED: Obamacare exchange asks for fee on all insurance policies)
The state exchange, Connect For Health Colorado, has operated with federal grants for its first year of operation but will need to be self-sustaining starting January 1. Exchange director Patty Fontneau presented a $65.2 million budget for 2015 to the exchange’s board members on Monday.
Fontneau previously told The Denver Post that the fee on all state insurance policies is actually a reduction in insurer fees. Cover Colorado, a former state plan for high-risk patients with pre-existing conditions was authorized to charge $3.79 per insurance policy each month in order to fund its operations, until it was rolled into the Obamacare exchange in 2014.
The Colorado exchange is authorized by the state legislature to approve the tax on all insurers until 2016. The board approved the new tax on Monday by a vote of 7 to 1.
Colorado isn’t the first state to hit all insurance carriers in order to fund the select few which operate on the state’s Obamacare exchange. Washington, D.C.’s health care exchange was the first to approve such a scheme. (RELATED: DC Will Tax All Insurers To Pay For Obamacare Exchange)
The city council approved the plan in May. But insurers who intentionally opted out of the risky Obamacare exchange have already threatened to sue, the D.C. exchange director admitted in an interview. (RELATED: DC Insurers May Sue Over Obamacare Exchange Tax)
On top of a flat fee charged on each and every monthly premium — likely to be passed onto consumers — Colorado also hopes to generate funding for 2015 by charging a tax of 1.4 percent on exchange Obamacare exchange customer’s monthly premium. The enrollment or administrative fee is expected to raise $6.9 million for the 2015 budget.