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State board rejects proposal to seek state funding to subsidize Nevada’s health insurance exchange


CARSON CITY – A board overseeing the creation of the state’s health insurance exchange opted today not to seek general fund support to subsidize the fees charged to participants in the program.

The Finance and Sustainability Advisory Subcommittee of the Silver State Health Insurance Exchange Board had proposed subsidizing the monthly fee paid by enrollees with a general fund appropriation from the state Insurance Premium Tax.

The proposal was to take 25 percent of the estimated increase in the insurance premium tax revenue resulting from uninsured Nevadans entering the health insurance market to help fund the program.

Relying on general fund support would have dropped the monthly user fee from $4.40 in 2014 to about $2.78 for each participant. The rate under the proposed funding plan will rise to $6.20 in 2015. This rate too would be lower with general fund support.

The fees are estimated to generate $7.7 million in calendar year 2014 and $13.6 million in 2015.

But the recommendation to seek general fund support was rejected by a 6-1 vote of the board. The budget for the exchange, and its funding sources, will become part of Gov. Brian Sandoval’s 2013-15 budget now being drafted for the 2013 legislative session.

Sandoval made it clear on Tuesday that he would oppose supporting the exchange with general funds, even though he has decided that having Nevada move forward with its own exchange is the better option than letting the federal government operate it.

The exchange should have to “stand on its own merits through user fees,” he said.

The federal government is paying for more than 99 percent of the cost of implementing and operating the exchange through Dec. 31, 2014. But beginning Jan. 1, 2015, the state will have to pick up the costs of running the exchange. The plan as approved by the board would cover those costs with the user fees exclusively.

Board member Dr. Ronald Kline said an argument could be made to justify seeking general fund support.

“While I agree philosophically with the recommendations of the committee, that by having more insured people in Nevada we’re going to increase revenue and so it is not unreasonable to ask for a portion of that,” he said. “I agree with that philosophically.”

But from a political perspective such a proposal is unlikely to get support from the governor and could engender bad will for no positive reason, Kline said.

“The second point is, that for subsidized individuals, the higher per-member, per-month fee is completely absorbed by the federal government,” he said. “So by taking 25 percent from the general fund and lowering the per-member, per-month fee, what we’re practically doing is we’re taking more money from our general revenue and accepting less money from the federal government.”

The exchange is basically a one-stop shop for Nevadans to search for and purchase health insurance coverage. The exchanges were authorized by the Affordable Care Act, most of which was upheld by the U.S. Supreme Court in late June. It will begin operation on Oct. 1, 2013.

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