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Nevada State Exchange Folds

Posted on October 20, 2012 by admin

$474 million was the reported amount wasted on four state-specific healthcare exchanges, including that of Oregon, Massachusetts, Maryland and Nevada. Weeks later, Nevada’s final individual tally was released to the public – $91 million – along with a prompt decision to turn to the federal government for salvation.

Nevada, whose state exchange only enrolled 45,390 people, is shutting down their marketplace and joining Healthcare.gov. But $91 million isn’t a loss you can just sweep under the rug, not if the taxpayers who provided these funds have anything to say about it.

And spoiler alert: they always do.

Since the healthcare exchange opened its virtual doors back in October, there was debate as to whether or not states should have their own marketplaces. Typically, conservatives saw it as a no-brainer. Anything that limited the power of the federal government was desirable. Having each marketplace tailored on a state-by-state basis was a bonus.

Most states, however, were largely on the other side of the equation. From Alaska to Florida, Arizona to Texas, most states believed that focusing on one healthcare exchange and not using taxpayer funds to create their own marketplace was the best option. Even if they did not realize it at the time, they were saving their state from paying a large fraction of what the entire federal exchange would cost. The expenses of Nevada alone ($91 million) cost more than 13 percent of the entire federal exchange ($693 million), which included 34 states before the transition of Oregon, Massachusetts – though their transition might be temporary – and now Nevada.

But what of the hard-earned tax dollars that provided for these failed ventures? As unlikely as it seems, seeing as it’s usually just an idealist concept, the answer may very well be recompense. Sen. Orrin Hatch (R-UT) and Sen. John Barrasso (R-WY) have introduced a bill that would make the states that chose to abandon their state exchanges in favor of the federal marketplace pay back the tax dollars used to set up the failed programs. The law would have these states pay back 10 percent of the ill-employed funds each year for 10 years.

But spending on Nevada’s marketplace is far from concluded. The federal government still has to funnel funds into the state’s transition, vowing to pay 90 percent of any costs associated with disconnecting Nevada’s Medicaid system from the Xerox health insurance enrollment that the state had initially employed, then linking it to Healthcare.gov. To the astute mathlete, this leaves 10 percent of these transitional costs to be paid by the state of Nevada. Initial estimates have the state paying at least $1,500,000.

Sens. Hatch and Barrasso have come up with an admirable plan to repay the millions of tax dollars burned through by the states. But the key lesson in this situation is that states – if interested in joining the federal exchange due to an overall lack of success – should do so sooner than later. It could save their residents millions.

Nevada seems to have just met the cut. The reveal of transitional fees indicates that other states may not be so lucky. Given these costs and the possibility of Sens. Hatch and Barrasso’s repayment legislation, the decision to leave a state exchange is no longer a free ride. Moreover, should a state wait too long to jump ship, and should other states take advantage of the current figures (paying just 10 percent of the transition), the wait-and-see bystanders may have to pay much higher rates when they decide a change in exchange is necessary. Simply put, the federal government may not have the funds to pay for 90 percent of everyone’s transition, or – they may choose not to.