Skip to content

State Obamacare Exchanges ‘Sustainable’ Without Federal Aid, Official Tells Congress

State insurance exchanges are healthy financially even without the federal funding that ran out this year, a top Obama administration official told a House subcommittee Tuesday.

“All states are sustainable today,” said Andy Slavitt, acting administrator for the Centers for Medicare & Medicaid Services. He refused to predict if any of the remaining 13 state exchanges would eventually need to shift to the federal exchange.

In the past year Nevada, Oregon and Hawaii have begun using the federal exchange to enroll consumers after their own systems ran into technical troubles. Matt Bevin, who on Tuesday assumed office as governor of Kentucky, said he plans to dismantle the state’s successful insurance exchange because he believes switching to the federal exchange would serve the state’s residents as well.  Kentucky’s uninsured rate has fallen by about half in the past two years, which many proponents credit to how easily consumers enrolled in an expanded Medicaid program and private health insurance on the state’s exchange.

Slavitt said states have the right to decide if they want to run their own exchange, but Kentucky’s Kynect exchange “has been a terrific success. … It’s done such a good job it feels like it’s going to be good for consumers to stay the way they are.”

He testified before the House Energy and Commerce Subcommittee on Oversight and Investigations. Committee Republicans said several states wasted millions of dollars trying to set up an enrollment system only to later resort to using the federal website. “CMS oversight has been woefully sloppy at best and willfully ignorant at worst with obvious spending abuses costing taxpayers billions and counting,” said Rep. Tim Murphy, R-Pa., chairman of the subcommittee.

Democrats noted that more than 17 million Americans have gained health coverage under the health law and the nation’s uninsured rate has fallen from 16 percent in 2010 to 9 percent this year.

CMS distributed more than $5 billion to help states establish insurance exchanges, but the federal funding for them ended last year. All exchanges were supposed to be self-sustaining beginning Jan. 1, 2015. Kentucky and most states are paying for their insurance exchanges through a tax on insurance premiums.

In a background memo prepared for Tuesday’s hearing, the committee said the Health and Human Services’ Office of Inspector General warned in April that some states might be illegally using federal funding to pay for operations this year. Slavitt said CMS is working to recover money that exchanges spent inappropriately.

GOP House members stressed that insurance premiums are rising significantly on the exchanges next year and many consumers will see large annual deductibles that will inhibit them from using their coverage.

States with their own exchanges have seen uninsured rates fall by 47 percent since 2013, while those under the federal exchange have seen rates drop by 45 percent, Slavitt said. As of June, 2.9 million Americans had private coverage through state-based exchanges.

Rep. David McKinley, R-W.Va., told Slavitt that his constituents face an average 20 percent monthly premium hike for plans sold on the exchange. “The name of the law is the Affordable Care Act, but many can’t afford it,” he said.

Slavitt replied that the uninsured rate in West Virginia has fallen by more than half to about 8 percent in the past two years, though most of the drop results from the state’s Medicaid expansion.  “The majority of residents still have opportunity to get covered for less than $100 a month,” he said.

Related Topics

The Health Law