Last week, Kentucky created a government agency to carry out healthcare reforms mandated by the Affordable Care Act. The Kentucky Health Benefits Exchange will help more than 600,000 uninsured state residents shop for and purchase health insurance online.
The exchange has nearly 30 full-time employees and a slew of contract workers, with an annual budget of $39.5 million.
Kentucky agreed to run an exchange in partnership with the federal government, which has proposed a 3.5 percent fee on insurance premiums to operate the exchange for all states that did not choose to create their own system, The Associated Press reports. Meanwhile, Kentucky officials suggested using an existing 1 percent fee on premiums, which could save local insurance purchasers more than $50 million a year.
“If Kentucky did not operate its own exchange, based on premium volume, the federal user fee has the potential of generating more than would be needed to support a state-based exchange,” Carrie Banahan, executive director of the Kentucky exchange, said, according to The AP. “And Kentucky policy holders and insurers could essentially be subsidizing the costs of other states.”
The federal government is subsidizing the state’s exchange for the first year of its operation. Beginning in 2015, Kentucky will have to take on the costs.