Follow Up on HealthSource Math

On Friday, I sorted through some of the arguments for keeping HealthSource RI as a state-government-run start-up company, even though the business model does not appear to make sense for a state the size of Rhode Island.  Among the points I raised was that nobody seemed to know where the exchange’s director, Christine Ferguson, came up with the number of $17.3 million when discussing the total fees that the federal government would charge insurance customers in Rhode Island if it were to take over responsibility for the state’s ObamaCare exchange.

Shortly after that post went live, RI Center for Freedom & Prosperity adjunct scholar Sean Parnell heard back from a HealthSource spokesperson providing some numbers for the calculation.

For fiscal year 2016 (i.e., July 2015 through June 2016), HealthSource’s enrollment targets are 41,000 people in the individual market (the number right now is around 28,000) and 53,000 in the small business market (the number right now is 1,110).  The total market (in and out of HealthSource) is might be bigger than the numbers that the House Fiscal Staff  used for its presentation because businesses with 51-100 employees are included.

It still isn’t clear what average premium HealthSource used to reach $17.3 million.  The current average of $368 per month they provided to Sean produces $14.5 million if the federal government continues to charge a 3.5% fee on plans issued through a federal health benefits exchange.  Using the estimates from House Fiscal — $365.30 for individual plans and $440.46 for small group plans — produces $16.1 million.

For 94,000 people to produce $17.3 million from a 3.5% fee, their average monthly premium would have to be $438.

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