Think About the Worst Corporate Merger Ever – Then Add Obamacare
I hate to recycle the old slight about “re-arranging the deck chairs on the Titanic,” but the latest news from state exchanges makes it impossible to avoid:
Under the Affordable Care Act, the federal government gave states a collective $4.8 billion to set up and customize their own exchanges for their own state residents. The idea was that the federal government would help prop up the exchanges, and then states would have to make them self-sustainable by this year.
However, a number of states including California and Oregon are having trouble financing their exchanges now that federal funding is drying up. Covered California, for example, is running a deficit of $80 million.
To save on costs, California is reportedly in talks with Oregon, another state struggling to afford its exchange, to merge their exchanges, The Hill first reported.
They’re not alone. Other states are contemplating building similar multi-state exchanges. New York and Connecticut are also discussing the plan, though both are in the very preliminary stages. (Brianna Ehley, “States Band Together to Keep Obamacare Afloat,” The Fiscal Times, May 26, 2015)
It also reminds me of the failed businessman who declared: “I lost money of every unit sold, so I tried to make it up on volume.” If the plaintiffs in the King v. Burwell case win, and no tax credits can flow to insurers through federal exchanges, the matchmaking between these failing exchanges will be a real spectacle. The solution, as discussed in this blog, is to allow people buying health insurance to get their tax benefit outside an exchange.
California has a Democratic legislature, a Democratic governor, and a budget in the hundreds of billions. I am puzzled that they cannot find $80 million for their exchange. If Covered California has 1 million insureds, they could add $80 a year to each premium and be solvent.
I am not saying that these steps would be good. I wonder what is stopping them from happening.
The optics.
I thought ACA prohibits public support after some specific date. In other word, the exchanges are required by law to be “self-supporting” on and after that date.
Yes? No?
I thought ACA prohibits public support after some specific date. In other words, the exchanges are required by law to be “self-supporting” on and after that date.
Yes? No?
Yes. That is the whole point: No more federal hand outs, so states are scrambling.
Sorry, I think I asked a good question – but it’s not good enought to ask twice.