In February, President Obama released his fiscal year (FY) 2017 Budget which contains information on his funding requests for this upcoming fiscal year. The budget includes a request for an additional $535M to run the federally-facilitated marketplace (FFM) on top of the $1.6B that is already being collected from marketplace user fees.[1] The FFM currently provides some or all marketplace services such as eligibility, appeals work, certification and oversight of qualified health plans, payment and financial management functions, and the Small Business Health Options Program (SHOP) operation for 38 states.

The President’s funding request for marketplace services specifically includes the following:

FY 2017 Program Level Request (dollars in millions)
Marketplace Operations $659
Consumer Information and Outreach $744
Marketplace Information Technology $657
FTE and Related Expenses $85
Total, Marketplace Program Level 1 $2,145


Private exchanges can help enroll individuals in both subsidized and unsubsidized health care and other ancillary coverage at a far lower cost than what is being proposed. Most private exchanges operate for much less than the 3.5% user fee that is currently being charged to carriers and passed on to consumers who use Private exchange technologies have evolved to accommodate all of the core functions of including: eligibility, enrollment, plan selection, call center services, and payment and financial management services. In addition, many private exchanges offer expanded coverage options including dental, vision, life, disability, retirement, and others not currently offered or contemplated on By leveraging existing and proven technologies that are operating in the market today, individuals and groups can browse, select, and enroll in coverage for both individual and group insurance coverage.

In order to best take advantage of the opportunities that private exchanges provide, there would need to be a better public/private partnership solution in place than there is today. At Leavitt Partners we are working with private exchanges and CMS to improve access to the federal data services hub via enhancements to the direct enrollment service for both carriers and web-based health insurance brokers. If this happens, private exchanges will have the ability to more seamlessly enroll individuals into both subsidized and unsubsidized coverage at a far lower cost with more choice than today’s federal or state-based solutions.

Although it’s unclear what makes up marketplace IT spending, it is clear that existing private exchange technologies could be leveraged to save taxpayers hundreds of millions of dollars. Private exchange technologies could still offer consumers multiple different subsidized and unsubsidized medical coverage options plus additional ancillary options across multiple different vendor platforms. Increased choice, less cost, and better sustainability. That would be a win for everyone.