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ACA administrative costs escalating

State's health insurance exchange gets $674-million federal grant

By Chad Terhune
Los Angeles Times, January 18, 2013

Federal officials awarded California's new health insurance exchange a $674-million grant, providing money for a crucial marketing campaign aimed at millions of uninsured consumers.

The state-run insurance exchange, Covered California, is seeking to fundamentally reshape the health insurance market by negotiating with insurers for the best rates and helping consumers choose a plan.

In addition to “top down” advertising, Lee said, the exchange will be giving grants to religious groups and other community organizations for education at the grass-roots level.

The exchange also has the task of helping millions of Californians determine whether they qualify for an expansion of Medi-Cal, the state's Medicaid program for the poor, or federally subsidized private coverage.

In addition to marketing, Covered California will use the federal grant money to help fund operations through January 2015, when the online marketplace will rely on fees assessed on health policies sold through the exchange.

Separately Thursday, the California Endowment said it would spend $225 million over the next four years to help implement the federal healthcare law in the state.

http://www.latimes.com/business/la-fi-health-insurance-grant-20130118,0,...

Comment:

By Don McCanne, M.D.

The administrative waste in our health care system far exceeds that of any other nation. During the political process of crafting the Affordable Care Act, we warned that this model would greatly add to this administrative waste. We are now beginning to see the extent of that expanded waste.

On just California's insurance exchange alone, taxpayers are having to foot additional costs of two-thirds of a billion dollars just for administration and marketing of the exchange plans. In the future, these additional administrative costs will be downloaded to us through new fees assessed on the health policies sold through the exchange. Just think of all of the other administrative expenses for the multitude of other features of the Affordable Care Act, not just in California but throughout the nation. And not one cent of this additional administrative spending goes to health care. Sick!

Although taxpayers have already invested way too much in this wasteful program, we can still cut our losses and move on with an administratively efficient single payer system - an improved Medicare for all.