Gov's budget relies on feds to fund HealthSource

Erika Niedowski and David Klepper, Associated Press

PROVIDENCE, R.I. (AP) -- Gov. Lincoln Chafee's proposed budget includes no state money for the new health insurance marketplace and assumes Rhode Island will get an extension to use federal funds through the first half of 2015, the year the marketplaces are supposed to be self-sufficient.

The $8.5 billion budget blueprint released Wednesday includes $23 million in spending for HealthSource RI, all of it federal money.

Chafee administration officials said they believe Rhode Island's request to extend the deadline for using the funds will be approved. There's currently no plan to recommend a way to pay for HealthSource going forward, according to Director of Administration Richard Licht. He said the state still doesn't know enough about how much it will take to operate the marketplace, also known as an exchange.

"At the current moment we have no intention," Licht said. "That could change. It has been up for three months. We are very pleased that it is working — obviously much better than what we've seen at the federal level. But we don't have enough experience to make a full recommendation."

The federal health care overhaul requires that state-run marketplaces, like Rhode Island's, develop their own revenue sources to cover operations beginning next year.

HealthSource RI Director Christine Ferguson told the House Finance Committee last fall it would cost between $17.9 million and $23.9 million annually to operate the marketplace.

Rhode Island has been allocated more than $80 million to build and operate its exchange.

Finance Chairman Helio Melo, D-East Providence, said Wednesday he's optimistic the Chafee administration will study and possibly suggest ways of paying for the marketplace going forward — even if it means it's up to his successor to work out the details. Chafee is not seeking re-election.

"Anytime we're looking at losing federal funding for something it's a concern, but this governor will still have a lot to do in preparing the first budget for the next administration," said Melo. "They have enough money to carry us through fiscal year '15," which begins July 1.

Melo had expressed frustration at the fall committee hearing that Ferguson couldn't be more specific about the cost.

"We are just trying to figure out how this is going to work," he said at the time. "We don't know if we're building a colonial, a mansion, a bungalow. It always seems like we'll continue with construction (and) we'll worry about how much it's going to cost us later."

HealthSource RI enrolled 11,770 individuals in private plans between Oct. 1, when the marketplace opened, and Jan. 4. A federal target enrollment of 12,000 was set through the end of the first open enrollment on March 31.