Colorado Community

Thirty-percent Attrition Bites Into Exchange Revenues

Aimee Sharp
Author | Shield HealthCare
10/01/14  10:04 PM PST
From Health News Colorado

By Katie Kerwin McCrimmon, for Health News Colorado

Health exchange managers expect to lose about 30 percent of enrollees due to attrition by year’s end.

That means they’ll carry over about 114,000 existing customers as they head into the 2015 open enrollment season.

Connect for Health Colorado managers expect enrollments to slide back from a total of 146,000 so far.

For 2015, managers plan to retain the base of 114,000. Then, initial projections for next year predict low-end sign-ups of 54,500, a mid-level goal of 80,000 and a high-end target of 128,500 additional customers.

Again next year, managers expect about 30 percent of the new customers to drop off at some point during the year.

Managers say high attrition is typical in the health insurance industry, and other states are seeing similar trends. Furthermore, the exchange’s CFO had planned on banking about $5 million this year from user fee revenues. Even with just 114,000 enrollees, the exchange should take in about $5.4 million in user-revenues this year. So, there’s no shortfall in the near term.

But Connect for Health must become financially self-sustaining. The 1.4 percent fees on monthly premiums for each plan sold are a key source of revenue. And after start-up cash from multiple sources evaporates in 2016, the fees will be the core source of income, meaning dropouts harm the exchange’s bottom line.

Read the full article from Health News Colorado.