Nevada is setting its sights on an entirely state-based exchange—again. Despite the Trump Administration’s persistent efforts to disrupt the ACA, Nevada exchange Executive Director Heather Korbulic believes the timing is perfect for the state’s second go-round at a home-based insurance marketplace.
During the rocky launch of the ACA exchange in 2014, Nevada’s initial efforts to implement a fully state-based marketplace (SBM) missed the mark. A myriad of technological problems, billing oversights and consumer grievances sullied the state’s first attempt throughout the enrollment period. The software, created by Xerox, was so faulty that health officials could not accurately monitor who had paid or what services had been purchased. Consequently, the state dissolved its agreement with Xerox and settled for a state-based model with the federal platform (SBM-FP).
Last year’s dramatic efforts to repeal-and-replace the ACA postponed further discussions about returning to a state-run exchange. Now, with repeal efforts shelved but premiums still spiking, Nevada has chosen to revive their efforts towards an SBM.
The state’s main motivation for action is the continuous rise in the user fees associated with operating the federal platform. Although the federal government pardoned the fees for Nevada in 2015 and 2016, the state became responsible for the costs in 2017 at a rate of 1.5% of premiums sold on the federal platform. In 2018, the rates jumped to 2% and are set for 3% in 2019. To cover these expenses, Nevada has been charging its insurers a fee of 3.15% of premiums. But Korbulic says, “With the planned increases to the user fee, in 2019, Nevada would be left with only 0.15% of the assessment to conduct all of the functionality required of the SBM-FP. We believe this would make the marketplace insolvent and unable to adequately perform its required functions.”
The impending 3% user fee will cost Nevada roughly $12 million in 2020. However, state experts estimate savings of nearly 50% with a state-run platform that would keep operational costs closer to $6 million. Thus, and at the very least, officials expect slower growth in premiums, if not an immediate decline in premium prices. The potential savings could not be timelier, as the Urban Institute released a report outlining a 45.6% increase in Nevada’s lowest-price silver plan between 2017 and 2018.
An added motivation for Nevada’s latest plan is the lack of data when it comes to truly understanding consumers. The intermittent zip code-level data provided by the Centers for Medicare and Medicaid (CMS) does not offer exchange officials enough details to know who is actively using the system during the open enrollment period or other specific information needed to steer targeted outreach. Although states are unable to manage every aspect that influences insurance rates, Korbulic believes that having the technology to view more state specific data will unearth economic efficiencies that can help lower costs for Nevadans by increasing enrollment through more direct consumer targeting.
Seeking an entirely new design, development and execution of a state platform, the state exchange reserved $1 million in February to make the switch. Governor Brian Sandoval released Nevada’s Request for Proposal for a vendor to run their technology and call center operations. Given the failed Xerox efforts, insurers have been reasonably concerned about the program’s launch. However, Nevada is only coordinating with vendors that have proven track records in other states. With all bids submitted, the state believes it will have its vendor contracts set by late summer.
Korbulic understands how important it is to clearly understand the costs of this bundled system so that the state can determine if it is affordable and if it will ultimately operate with a smaller price tag than the Federally Facilitated Marketplace (FFM).
Some things are already looking up for Nevada, even as the federal government has cut back its ACA marketing funds. Nevada has supported its own marketing efforts for several seasons and is prepared to allocate $3.2 million for advertising next year.
Nevada is one of five states — along with New Mexico, Kentucky, Arkansas, and Oregon — that operates all facets of its exchange except the platform, HealthCare.gov. Fortunately for Nevada, CMS has previously granted the state statutory permission from its 2011 efforts to complete the transition.
If Nevada’s shift succeeds and spawns the anticipated savings, it is likely that more states will take on the challenge. Oregon has begun reconsidering an SBM, while New Mexico is also starting to weigh the system’s pros and cons. Jon Kingsdale, former executive director of the Massachusetts exchange, argued that it is “perfectly believable” that states can save money. “You may get some more states, if this works out well, deciding they want to have their own exchange.”
A recent study by Covered California highlighted the higher enrollment rates and slower premium growth in state-run marketplaces when compared to the federal-run exchanges.