State Insurance Exchanges May Be Going Bankrupt

The way the Obamacare law was set up, the states were given $4 billion dollars to set up and run the first two years of the exchanges, after that the were supposed to be self-sufficient. The operative word is supposed. IBD is reporting that many of the state exchanges will face financial crises once the federal money runs out.

California, for example, is supposed to be a big ObamaCare success story. But it faces a $78 million shortfall next year and a $34 million deficit in 2016. So the state is setting aside $184 million of its federal grant money to offset those projected deficits.

Executive Director Peter Lee told the state finance commission that Covered California still faces a “long-term sustainability” problem.

Minnesota’s MNSure, meanwhile, is looking at deficits equal to 11% of revenues next year and 13% in 2016.

Washington state next year may have to make severe cutbacks, including stripping out money budgeted for marketing as well as computer and software upgrades.

Hawaii is debating whether to have the state take over its exchange, amid warnings that the “business model will not survive.”

As AP recently reported, Rhode Island and Oregon also face looming budget shortfalls. Oregon is contemplating a 20% budget cut next year after suffering a disastrous rollout in October.

The main cause of this bleak outlook is the dismal ObamaCare enrollment.

To pay for their operations, the state and the federal exchanges charge excise taxes of 2% to 3.5% on plans sold through them.

As enrollment lags, so do revenues. Just three of these 15 nonfederal exchanges claim to have reached their enrollment goals. The rest are far behind.

The progressives who created Obamacare did not account for the fact that Americans may indeed be smart enough to not to sign up for an insurance plan which costs more, have a higher deductible, and/or a limited network of doctors.

According to the IBD report it is only going to get worse.

California and Washington are only about halfway to their enrollment goals, according to ACASignups.net. Maryland, Nevada and Oregon aren’t even 20% there. And Minnesota’s enrollment numbers have yet to reach the state’s worst-case scenario.

In Hawaii, just 4,000 had enrolled by early February, a far cry from the governor’s prediction that 100,000 would do so in the first two years.

Enrollment at the federal exchange isn’t much better.

Nationwide, ObamaCare has signed up less than half what the administration predicted.

And according to an earlier IBD report Obamacare enrollment is slowing down as we get closer to the March deadline.

Remember that when this bill was passed and we were told Obamacare will cut costs?  Just another broken promise.