Mass Connector Up to $180 Million to Change Tires on the Exchange

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The Boston Globe reported on its website yesterday that the Massachusetts Connector was awarded a Level Two establishment grant worth $81 million.

I have written before on the Pioneer blog about the fire hose of federal dollars coming to New England for exchanges,  but Massachusetts was always seen as just needing to make “minor” tweaks to be in compliance. In fact, many supporters of the ACA contend that the Massachusetts health care law is the exact same as the federal version, some have even used colorful language to make this point. (The irony is that this individual sits on the Connector governing board and should know better.)

NE Exchange Money MA
Planning Grant $1,000,000
Level-1 Establishment Grant (a) $11,644,938
Level -1 Establishment Grant (b) $41,679,505
Level-2 Establishment Grant $81,256,970
Early Innovator Grant $35,591,333
Early Innovator Grant Supplement $8,895,029
Total $180,067,775

Source: CCIIO

To be fair, $36 million of this money is for a New England regional exchange for Connecticut, Maine, Massachusetts, Rhode Island, and Vermont. However this has not stopped the Federal government from separately awarding Connecticut, Vermont, Rhode Island planning grants, level one and level two establishment grants.

And granting the state a $8 m supplement grant to “accelerate changes in its current Exchange IT infrastructure.”

Exchanges are targeted at small business employees and individuals, and by default exclude all covered lives for Medicare, Medicaid, and most employees of large self-insured companies. The ACA chose public exchanges as the exclusive distribution channel for premium subsidies.

Given the targeted slice of the marketplace being offered access to an exchange, and the cost to set up these exchange, one is left to wonder why Congress simply didn’t give a refundable tax credit for insurance and let all employees utilize private exchanges (costing taxpayers zero planning dollars) such as NFP in Massachusetts, Bloom Health in the Midwest or HealthPass in NY.

Taxpayers in the Commonwealth need to start to ask if they will, at minimum, receive $180 million in value from the Connector. Can we expect a good return on investment?

Don’t forget, that is $180 million for set up, and does not include the ongoing cost of the annual subsidies, and the annual assessments required to fund the operations of a public exchange in each state, roughly $35 million in Massachusetts as of today.

Find me on Twitter: @josharchambault