The state Board of Examiners, including Gov. Brian Sandoval, today approved a contract worth up to $72 million through 2016 to set up the information technology system needed to implement the Silver State Health Insurance Exchange.
The contract with Xerox State Healthcare will allow the state to move forward with the exchange, basically a one-stop shop for purchasing health insurance. The exchanges were authorized by the Affordable Care Act, most of which was upheld in a U.S. Supreme Court decision in June.
Sandoval said he is supporting the development of a Nevada-based exchange so it can be tailored to fit the needs of Nevada residents. The alternative would be to have the federal government operate an exchange in the state. The state would still be obligated to pay for its operation beginning in 2015.
Because the federal government is paying for more than 99 percent of the cost of implementing and operating the exchange through Dec. 31, 2014, Sandoval said it was a prudent decision for the state to move forward with its own program.
The state exchange must be operational by Oct. 1, 2013.
While the development of a Nevada exchange is the right decision for the near term, Sandoval said it will have to become self-sustaining when the state has to find alternative funding sources to pay for its operation starting Jan. 1, 2015. Sandoval said he will oppose any effort to fund it via the state general fund or through an assessment on the state insurance premium tax.
One option to fund the program is an assessment on participants in the exchange.
The exchange should have to "stand on its own merits through user fees," he said.
"I feel like I would prefer to have this state have the control over this," Sandoval said during a lengthy discussion of the contract. "We don't know if we were to not have our own exchange what the federal government would do and what it would look like and what they would charge the state, which we wouldn't have any say obviously as to what that amount would be."
Jon Hager, executive director of the exchange, said that if the Affordable Care Act is repealed following the November presidential election, the state will be able to end the contract with Xerox without penalty.
The state is still awaiting notification from the federal government that it will receive a $50 million grant to pay for the Xerox contract, and other expenses of the exchange, he said. That notification is expected within the next few days.
The Board of Examiners, which also includes Attorney General Catherine Cortez Masto and Secretary of State Ross Miller, approved the contract.
Estimating enrollment in the exchange is still a work in progress. Sandoval said today he is still gathering information on the implications of expanding Medicaid eligibility allowed under the Affordable Care Act. Expanding Medicaid would likely reduce enrollment in the exchange.
Enrollment estimates for the exchange for 2014 range from a low of 119,000 to a high of 145,000, depending on the Medicaid expansion issue.
The board overseeing the exchange will meet Thursday to consider a number of issues in the ongoing development of the exchange.
Nevada's decision to move forward with its own exchange comes after more than 70 Republican members of Congress sent a letter to the nation's governors in June urging them to oppose the creation of health care exchanges.
Sandoval moved forward in his first days as governor in January 2011 to implement the exchange. It was created by Senate Bill 440 of the 2011 Legislature. It was passed unanimously of those voting in both the Senate and Assembly at the end of the session. Four members of the Assembly were excused and did not vote.