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Thursday, October 29, 2020
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No Obamacare Health Insurance Exchange for USVI

The territory will not set up an exchange to help the uninsured purchase private health insurance and will instead opt to take an increase in Medicaid funding under the federal Affordable Care Act, Government House formally announced Thursday.

Under President Barack Obama’s Affordable Care Act, the territory has $24.9 million in federal assistance which it can use to subsidize insurance premiums on a local health insurance exchange.

A health insurance exchange would have helped uninsured people and small businesses purchase private health insurance plans by creating a one-stop online health insurance market, where Virgin Islanders could shop for different plans and access government subsidies to assist their purchases.

Alternatively the territory had the option to add the $24.9 million to a pool of $275 million in extra Medicaid funding the territory would be eligible for over the next decade. If the territory can fund the 45 percent local match, it could access more federal Medicaid dollars over the upcoming decade than if the funding goes to subsidize premiums.

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The territory had until Oct. 1 to make a decision and until January 2014 to set up an exchange.

Gov. John deJongh Jr. established a task force to study the question and make recommendations, and that panel concluded there were significant financial and structural roadblocks to establishing an exchange for the territory, many due to the disparity in the law as it affects insular U.S. territories, according to Government House.

At the same time, the option of accepting additional funding for Medicaid could immediately begin to help the most vulnerable of uninsured Virgin Islanders, according to deJongh.

"While this initial expansion does not address the immediate need of all uninsured, it is our intent to phase in Medicaid expansion starting with the most vulnerable populations,” deJongh said in a letter to Senate President Shawn-Michael Malone about the decision. “Planned future expansions include further raising the income limits for families, senior citizens, childless adults and persons with disabilities,” he continued.

With the new Medicaid funding, the Department of Human Services will pilot an initial phase of expansion for pregnant women and children by raising the income eligibility level for those groups this August, according to Government House, which projects that measure would allow 3,700 more children to become immediately eligible for coverage, as well as 200 more pregnant women.

The ranks of the uninsured in the territory have increased to nearly one in three and, initially, a health insurance exchange appeared attractive as a way to decrease this high rate of uninsured and provide the territory’s residents affordable access to health care. But those benefits were outstripped by several other factors, according to Government House.

For one, the federal allocation of $24.9 million for premium and cost-share assistance for those seeking enrollment on the exchange and support from the government would not be sufficient for the territory.

An actuarial study commissioned by the government found the Virgin Islands would need about $34.5 million for first-year subsidies to cover 9,600 households and 13,400 individuals. The allocation, a one-time subsidy to cover reform from 2014 through 2019, would leave the territory with a $9.6 million gap the first year, and $147.6 million in underfunding over the next five years.

“As highlighted in the report, if we enjoyed the financial benefits provided to states, we would ensure subsidy coverage over the period of health care reform including yearly cost increases for subsidies due to persons rolling on and off the exchange,” deJongh said. “In either case, we have committed to overhaul the Medicaid system locally to improve our participation, relationship with providers and as a vehicle to improve our relationship with the federal government to access more programs given our needs. It will take a further commitment of consistent local funding to meet local matching requirements,” he said.

Insular territories like the Virgin Islands have several other disadvantages, according to Government House. They are required to cover costs for enrollees of much lower income than state governments are. Also territories were only authorized to apply for exchange planning grants in 2011, a year after most states, leaving less time to complete studies relevant to determining their best path.

And once an exchange is implemented, operational and governance costs would have to be borne by the local government and sustained by January of 2015. The minimum cost of an exchange build-out would be $30 million, not including staffing and on-going operation, according to Government House.

The territory was not successful in trying to partner with a U.S. state in establishing a multi-state exchange and lacks many of the health information technology systems compliant with the Affordable Care Act, a requirement to support the exchange’s platform.

All those factors, along with not enough time to set up the exchange, influenced the decision, according to Government House.

Delegate Donna M. Christensen responded to the news with a statement saying she "understands" the issues that affected the decision but is "disappointed" the administration chose this route.

“I can understand that there is not enough time now to seek an exchange with one of the 18 states or Washington, D.C., that we do not have the infrastructure that would be required and that there are concerns with the level of funding being provided to set up an exchange,” Christensen said in a statement Thursday.

“While I commend and support increasing income eligibility so that more people can take advantage of Medicaid, we can do that now!” she said. “We already have a significant increase in Medicaid dollars and continue to remain the only territory that has not spent any of the increased funding from the Affordable Care Act in Fiscal Year 2012 and 2013.”

“As I recall, the consultants hired by the governor and the task force offered alternatives for the almost $25 million the territory had been allotted for the exchanges,” she said.

Christensen said that although she had not had the opportunity to discuss the decision further with the governor, she was disappointed that the decision was not made to ask for permission to utilize the funding to provide individual insurance, “one of the alternatives that I was prepared to support.”

“I hope though that if indeed the funding is used to further expand the Medicaid coverage, with the ability to set our own poverty level, that the increased eligibility will be able to cover a significant portion of the now uninsured who are above the current federal poverty level and who are unable to purchase individual coverage,” she said.

DeJongh replied with a statement saying Christensen "glosses over two very important facts."

The first fact is that the closure of Hovensa reduced revenues "and therefore our ability to meet the higher local match requirement to exhaust the basic Medicaid amount to then access the amounts provided under the Affordable Care Act," deJongh said, adding that he believes Christensen "knows this because she has been unsuccessful in getting us state parity on this funding."

Secondly joining with a state exchange does not change the fact that the territory did not get 100 percent of funding to meet premium subsidies, deJongh said. "We only received $24.9 million, when the need is estimated at $34.5 million for the first year and a cumulative total of $251.5 million for years 2014-2019," deJongh said, defending his administration’s decision.

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