Fees will more than double for those who purchased health insurance policies through the Connect for Health Colorado exchange.
The Connect for Health Colorado board of directors voted unanimously Thursday to raise the fee from 1.4 percent of premiums to 3.5 percent on plans. The increase will go into effect next year, meaning a plan that would cost $4,000 this year will cost an additional $84 in 2016.
Board members considered a fee spike as high as 4.5 percent in a Wednesday meeting with Colorado lawmakers, who questioned the proposal and efficacy of the board, according to Health News Colorado.
Insurance carriers are the ones who pay the fees to the exchange but they openly pass on those costs to consumers, according to The Denver Post.
Increasing the fee to 3.5 percent makes Colorado’s equal with that of the federal exchange and is expected to bring in an additional $5.8 million in revenue.
The fee increase was expected. At its inception, Connect for Health Colorado was planned to cost roughly $26 million per year. That cost has nearly doubled and the exchange is hoping for a budget as high as $54 million for the 2015-2016 fiscal year.
The $54 million budget is dependent on an anticipated 59 percent surge in enrollment between this year and next. However, anything less that $54 million would mean operating without needed new hires and delaying technology upgrades.
The board also approved a change to a broad market assessment charge applied to policies every month. In 2016, every policy, including private policies in Colorado, will be charge $1.80. The assessment fee was $1.25 in 2015.
Together, the fee on premiums and the assessment will bring revenues to about $40 million, which would cover operating costs but no capital costs.
Connect for Health Colorado will be able to sweeten the pot if it can collect reimbursement for costs incurred to enroll Medicaid recipients.
Unlike other states, Colorado’s exchange has not documented Medicaid enrollees and their costs to the exchange. Without documenting them, the exchange is not eligible for federal reimbursement, which can be substantial.
The four state exchanges closest in enrollment to Colorado's receive $15 million to $29 million in Medicaid recovery, according to the exchange. Revenue scenarios drafted May 1 estimate Colorado’s exchange will be able to recover $2.5 million in Medicaid costs.