State-Based Health Insurance Exchanges (SBEs) play a crucial role in facilitating access to affordable health insurance coverage for individuals and families across the United States. These exchanges, established under the Affordable Care Act (ACA) enable states to offer a marketplace for health insurance plans, ensuring that people can compare different options and find affordable coverage that meets their needs. SBEs are required to be self-sufficient, meaning they must generate the funds necessary to operate and maintain their programs without relying on federal funding. This financial autonomy allows states to tailor their exchange operations to their specific populations and needs.
So how does an exchange stay operational? By collecting assessment fees on health insurance carriers participating in their marketplaces. These fees can vary significantly from state to state, and following, we will explore the reasons behind these variations.
Factors Influencing Assessment Fees
- Programmatic Responsibilities and Enrollments: Each state-based exchange has unique programmatic responsibilities and levels of enrollment. These responsibilities may include outreach and education efforts, customer support, plan certification, and other administrative tasks. States with larger enrollments and more extensive programmatic responsibilities may require higher assessment fees to cover their operational costs effectively. Conversely, states with smaller enrollments and fewer responsibilities might be able to sustain their operations with lower fees.
- Funding Model Variation: There are several models that states use to determine assessment fees, which contributes to the variation observed. Some states collect a broad-based assessment on all health plans sold within the state, regardless of whether they are offered on the exchange. Others utilize a Per Member Per Month (PMPM) fee, charging a fee for each enrolled member. However, the most common approach involves assessing a flat percentage of gross premiums earned for health plans that are sold on the exchange.
- Different Duties and Programs: Another significant factor contributing to the variation in assessment fees is the diversity of duties and programs that each state exchange is responsible for. Some states may have additional programs or initiatives aimed at improving health care access or addressing specific health concerns. The costs associated with these additional responsibilities can impact the assessment fees that carriers are required to pay.
- Federally Facilitated Exchange (FFE) Integration: States that opt for a State-Based Exchange using the federal platform (SBE-FP) also experience variation in assessment fees. These variations stem from the amount that CMS charges to use the federal platform and call center along with the programmatic responsibilities within each state.
The assessment fees collected by SBEs can differ significantly, which is a reflection of the diverse landscapes of healthcare access and management across the United States.