In March, we explored the future of HealthCare.gov user fees, an assessment states pay to the Federally Facilitated Marketplace (FFM) for using HealthCare.gov. To fund ongoing operations, the statute and implementing regulations under the Affordable Care Act (ACA) suggested that an Exchange may impose user fees on the health insurance issuers selling health plans through the marketplace. For plan years 2014 to 2019, the user fee charged by Health and Human Services (HHS) to fund HealthCare.gov was 3.5 percent. For plan years 2020 and 2021, the fee was reduced to three percent of premiums.
On Friday, April 30, 2021, CMS released its final 2022 payment notice ruling. In January 2021, during the last days of the Trump Administration, the proposed user fee for the FFM was 2.25 percent. In Friday’s notice, the Biden Administration’s CMS noted that it intends to adjust the fee level for 2022 to 2.75 percent for FFM states and 2.25 percent for state-based exchanges that use the federal platform (SBE-FP) — up from 1.75 percent in the January rule. The increases are due to changing administration priorities, enrollment increases from the American Rescue Plan and the COVID-19 special enrollment period (SEP), and higher costs for consumer outreach and navigators.
For FFM and SBE-FP states, this increase, while carrying a potential impact on 2022 premiums, may ultimately help lower the uninsured rates. The previous administration cut the marketing budget for outreach and consumer education by 90 percent. With marketplace awareness still low, the initial $50 million allocated to outreach and education for the COVID-19 SEP under the Biden administration is only the first step in increasing marketplace enrollment through marketing efforts.
By contrast, states operating a state-based exchange (SBE) determine their own user fees, and they can typically operate an exchange for considerably less than the fees incurred by using HealthCare.gov. The state can then decide how to best allocate the funds from the resulting savings. For example, the funds can be returned to enrollees, placed in a general fund, or the state can, under a Section 1332 Waiver, set up a reinsurance pool to help lower monthly premiums for consumers. These are some of the methods that have proven successful for established SBEs which have transitioned away from the ever-fluctuating costs of the FFM.