Blog: Insurance exchanges a growing problem for feds

The CMS has a growing health insurance exchange problem.

The authors of the 2010 federal healthcare overhaul never intended the federal government to operate most health insurance exchanges. But as the nation gears up for an expected 7 million new beneficiaries to make use of exchanges — about 85% of whom will require complex subsidies — 26 states have left their operations to the federal government.

And it’s beginning to look like the number of states hankering for a federal takeover could grow. A number of state-led exchanges are way behind schedule.

Are the feds up to the task, given that running something for more than half the country is a lot more complex than launching any one state exchange? Experts say local insurance market variations will stop the federal exchange builders from using cookie cutter economies of scale.

The CMS is coming up with a time-honored solution: it’s throwing more money at the problem. It is hiring outside help to get the job done in time, going on a contractor hiring binge.

However, it’s a strategy fraught with political risk. The House of Representatives last week rejected a $949 million boost the CMS sought from the legislation that will keep the federal government running for the remainder of the fiscal year.

Some of that money was presumably needed to finish building the exchanges and their interconnections. Gary Cohen, director of the Center for Consumer Information and Insurance Oversight at CMS, refused to address that in a call with reporters last week.

“I’m not going to comment on what the House did or didn’t do,” Cohen said when asked about the funding loss. “I’m just saying that we will be operating exchanges in all states, whether federal or state marketplaces for open enrollment on Oct. 1.”

Given the rising demands on the exchange office to provide services to the states, other CMS departments might want to keep a close watch on their accounts.

You can follow Rich Daly on Twitter @MHRDaly.