More than $860 million of the proposed $1 billion would go to building a federal exchange, which the Obama administration will set up for states that don’t build marketplaces on their own. The agency needs more implementation funds, officials explained at a Monday press briefing, because the $1 billion appropriated within the law is probably going to run out by the end of the year.
Half “has already been obligated or committed for another purpose,” said CMS official Ellen Murray. “The rest will be used this year.”
There’s little expectation that Congress will actually appropriate the funds the White House has requested, especially when the ask is so big and would pretty much go directly toward health reform implementation. What happens to the federal exchange if Congress turns down the request? Center for Consumer Information and Insurance Oversight director Steve Larsen tells Bloomberg that the government “will work with existing, available funding sources.”
There’s a big question, though, about where those funds are - if they do, indeed, exist. Politico’s J. Lester Feder broke the news last year that while the law allows for “essentially unlimited” funding for states to set up exchanges, it did not appropriate funds for the federal government to do the same. All it provided was a general, $1 billion implementation fund - that’s the one that HHS expects to exhaust by the end of the year.
That federal marketplace will near certainly be needed, as large states like Florida and Louisiana have firmly decided not to set up their own exchanges. Even some states that want to move forward are running into trouble: Just Monday, state legislators in Oregon blocked its marketplace from moving forward.
The uncertainty of where federal exchange funding will come from underscores how much of the health reform law’s fate hangs on the upcoming election. There’s little doubt that the Obama administration will, somewhere, find funds to make sure a federal exchange comes online. The marketplace is, after all, essential to making the Affordable Care Act work. Under a President Romney, it’s pretty easy to see those funds not turning up, and throwing a big wrench into the health reform law’s future.