- Associated Press - Wednesday, March 19, 2014

PROVIDENCE, R.I. (AP) - Rhode Island’s health insurance marketplace will be allowed to use federal funds to operate through the end of 2015, even longer than initially suggested, the agency director said Wednesday.

Director Christine Ferguson told the House Finance Committee she learned last week that HealthSource RI will be able to extend its use of federal funds through all of next year, even though they were supposed to expire at the end of 2014. She had previously indicated federal funds might be able to use federal funds through the first half of next year.

The state-run insurance marketplaces, including HealthSource RI, are supposed to be self-sustaining beginning next year. Some states have come up with a way to do that. But Rhode Island hasn’t yet decided on a funding source to cover the marketplace’s estimated $23.9 million annual budget once federal money dries up. Its proposed budget for the next fiscal year is $23.4 million, all federal money.

Some lawmakers questioned whether the state will be able to afford running it.

“We need to go back and answer that question: How much is this going to cost us, and are we building something that we can’t afford?” said Committee Chairman Helio Melo, D-East Providence. “Are we driving a Rolls Royce here? Are we driving a Bentley? Are we driving a Prius?”

Ferguson replied that “you’re driving what you need to change the health care cost curve.” She said the marketplace is not just about getting coverage to the uninsured. It’s designed to do something larger: address sky-rocketing health care costs.

“We have the ability to do something in Rhode Island that has not been done, which is to really manage cost and provide small businesses options that they’re never had,” she said.

Ferguson outlined nine options for paying for the exchange, including everything from using general revenue to imposing various assessments on marketplace users or all health claims in the state.

Rhode Island could also give up control and move to a federally-run marketplace, which more than two dozen states already are doing. But Ferguson told legislators that would be a “horrible idea,” saying the federal exchange “doesn’t even work very well.”

“We have given you something that you can be proud of,” she said.

Nearly 20,000 individuals had enrolled in private coverage through HealthSource RI through March 8. Health officials have reported another 48,602 Medicaid sign-ups under expanded eligibility.

HealthSource has a pending request for $51 million more from the federal government.