Deficit looms for Covered CA

State health-insurance exchange will take a hit when federal funding stops

When the federal government stops providing funding, Covered California—the state’s health-insurance exchange through the Affordable Care Act—will face an enormous deficit, according to a budget estimate.

Beginning on Jan. 1, 2015, the ACA will cease providing federal grants earmarked for state health exchanges, resulting in a $78 million deficit for California’s exchange, according to U-T San Diego. However, as Covered California spokesman Dana Howard noted, the budget forecasts were made prior to the beginning of open enrollment, making it difficult to estimate how the exchange’s operations budget will be affected until enrollment numbers are finalized.

A potential revenue source exists in the form of an administrative fee charged to insurers for each plan sold, and the exchange plans to save federal grant money to offset the upcoming loss.