Obamacare coming to life in state; eyebrows rise over funding

Oct 25, 2012

Far from the campaign trail, President Obama’s health-care law is chugging toward implementation in Washington state. A new agency is emerging, with a new name – and some questions about how to fund it.

The agency will call itself Washington Healthplanfinder. It's an example of a "health insurance exchange," which is where thousands of people will start buying health insurance in 2014 (if the Affordable Care Act remains law).

All 50 states need to establish an exchange, and Washington state is one of about 15 states that are moving quickly to meet all the deadlines set out in the federal law.

An appointed board runs Washington's exchange. They picked the new name at their regular meeting last week. They're settling dozens of other important details, which will affect what health insurance is available and how it is sold.

The price-tag for a new agency: $50m

And, as those details emerge, business leaders are fretting. They shared their concerns at a forum this week on implementation of the law. 

"The big thing is, how are we going to pay for that exchange?" asked Gary Chandler, vice president of the Association of Washington Business, which sponsored the event.

The Washington Healthplanfinder will cost about $50 million a year to operate, once it’s up and running, according to its own estimates released last week. Much of that cost goes for administration, marketing and customer service.

"The big thing is, how are we going to pay for that exchange?" - Gary Chandler, Association of Washington Business

That's about the same as what Massachusetts spends on its exchange, called The Connector.

Washington's health exchange board must come up with a way to cover its costs, and forward those to the state legislature. Currently, it's operating on start-up grants from the federal government.

The board's first choice: Raise a 1 percent tax on all health insurance premiums in the state.

Share the cost broadly, or charge users only

The business group is solidly against any kind of taxes, which Chandler says could discourage hiring. But the group has a deeper problem with having everyone pay:

"Bigger yet, the concern is gonna be: Should us on the outside, in the private market, have to subsidize and pay for those inside the exchange?"

A backup plan is to charge only the people who use the Healthplanfinder. Based on early projections, they’d end up with a service fee costing about $14 a month on top of their insurance premiums.

One concern there is, what if the fee scares people away from using Washington Healthplanfinder and its website? If fewer people use it, it won’t work as well as a competitive marketplace.

The exchange is the portal to getting subsidized health insurance. The federal government has promised thousands of dollars in subsidies, per person, for middle income and low income families who use the exchanges. But, Washington Healthplanfinder will be open to anyone, and the more people using the exchange, the more motivation for the insurance companies to offer competitive products.