Nevada Gov. Sandoval Okays Taxpayer Funded Health Insurance Exchange

Published September 27, 2012

The Nevada Board of Examiners and Republican Gov. Brian Sandoval have approved a contract worth up to $72 million through 2016 to set up an information technology system to implement the Silver State Health Insurance Exchange.

The contract with Xerox State Healthcare, approved August 13, will allow the state to move forward with the creation of the insurance exchange mandated by President Obama’s health care law.

Sandoval said he supports the development of a Nevada-based exchange. The alternative would be to have the federal government operate an exchange in the state.

“I feel like I would prefer to have this state have the control over this,” Sandoval said during a lengthy discussion of the contract at a meeting of the Silver State Health Insurance Exchange Board. “We don’t know if we were to not have our own exchange what the federal government would do and what it would look like and what they would charge the state, which we wouldn’t have any say obviously as to what that amount would be.”

Who Pays for the Exchange?

Most Republican governors have chosen not to proceed with exchange implementation. But because the federal government is paying the bulk of the cost of implementing and operating the exchange through Dec. 31, 2014, Sandoval said the state’s decision to move forward with the program was prudent.

The state will be obligated to pay for the exchange’s operation beginning in 2015. Sandoval maintains the development of a Nevada exchange is the right decision for the near term, but he said it will have to become self-sustaining when the state has to find alternative funding sources to pay for its operation, and that he will oppose any effort to fund it through the state general fund or an assessment on the state’s insurance premium tax.

One option for funding the program is a fee on participants in the exchange. The exchange should have to “stand on its own merits through user fees,” Sandoval said.

Unsubsidized User Fees

Within days of Sandoval’s decision, a board overseeing the creation of the state’s exchange opted not to seek general fund support to subsidize the fees charged to participants.

The Finance and Sustainability Advisory Subcommittee of the exchange board had proposed subsidizing the monthly fee paid by enrollees with a general fund appropriation from the state’s 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.

But the recommendation for general fund support was rejected by a 6-1 vote of the board. The fees are estimated to generate $7.7 million in calendar year 2014 and $13.6 million in 2015.

The exchange budget and funding sources will be included in Sandoval’s 2013-15 budget now being drafted for the 2013 legislative session.

Sean Whaley ([email protected]) writes for the Nevada News Bureau, where a version of this article previously appeared. Used with permission.