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HHS Seeks $1.5 Billion to Run Health Insurance Exchanges

Most states opt to let federal government shoulder costs (Apr. 10)

According to a report from the Kaiser Family Foundation, the Obama administration is trying for a second time to convince Congress to provide more funding for the health law’s insurance exchanges, which are set to begin enrollment this fall.

Based on figures released April 10 in the fiscal 2014 budget request, the administration estimates that the federal government will spend about $4 billion on federal- and state-run marketplaces for individual and small businesses purchasing insurance coverage.

“This budget supports the operation of the federally facilitated marketplaces, and provides for the assistance and oversight needs of the state-based and state partnership marketplaces as well,” Department of Health and Human Services (HHS) Secretary Kathleen Sebelius said.

President Barack Obama’s budget for the year beginning Oct. 1 seeks $1.5 billion to run exchanges in the 26 states that have refused to set up their own exchange, as well as the seven states that are partnering with the federal government to run an exchange.

The budget also assumes that the administration will collect $450 million in user fees, such as those levied on health plans that participate in the federal exchanges. The budget request and anticipated user fees will amount to about $2 billion for the federal exchanges.

According to the HHS, since 2011, 37 states and the District of Columbia received more than $3.4 billion in grants to operate exchanges. Obama’s budget request calls for an additional $2 billion in state grants in fiscal 2014.

The law provided generous subsidies to states that set up exchanges, and it was widely assumed most states would do so. But when so many opted to let the federal government establish the marketplace, many advocacy groups expressed concern that the law did not provide adequate resources, Kaiser says.

Earlier this year, federal officials asked Congress for $949 million to help fund the exchanges, but the request was not included in the continuing resolution that funds the government through Sept. 30. Sebelius said the request for additional exchange funding is part of “an ongoing conversation with Congress.”

“As this act is fully implemented and Americans begin to take advantage of the benefits, I’m hopeful that Congress will see that this is the law of the land,” Sebelius said at a briefing on the budget. “The Supreme Court has ruled; there has been an election. We intend to implement the law, and millions and millions of Americans are looking forward to the full implementation.”

Republicans on Capitol Hill were quick to dismiss Obama’s budget. The House GOP budget plan, unveiled March 12, would repeal and defund the health law.

Sources: Kaiser Health News; April 10, 2013; and FY 2014 Budget; April 10, 2013.

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