PROVIDENCE, R.I. (AP) — Rhode Island would likely face questioning from federal officials if it abandons its health insurance marketplace and transfers operations to the federal government, the head of HealthSource RI told lawmakers Wednesday.
Director Christine Ferguson told the House Finance Committee it's unclear whether the state would have to pay a financial penalty for giving up on HealthSource because no state running a successful marketplace has taken that step.
"I think we would definitely be subject to some very serious questioning," she said, adding that federal lawmakers have held oversight hearings on failed marketplace launches elsewhere. "I can't imagine that we would not have a similar conversation."
Rhode Island has been awarded some $140 million in federal funds — not all of it yet spent — to build and initially operate HealthSource RI, which has emerged as a model among state-run marketplaces. Most other states are using the federally run healthcare.gov.
Rhode Island has not identified a way to pay for HealthSource once federal funding dries up, and some lawmakers want to give up on it.
A bill reviewed by the panel Wednesday directs the governor to transfer operations of HealthSource RI to the federal government no later than year's end.
"It's probably a luxury that we in Rhode Island can't afford," said Rep. Patricia Morgan, R-West Warwick, the lead sponsor. "You all know the reality of the coming years. We just don't have the $23 million."
Gov. Lincoln Chafee's proposed budget for the fiscal year beginning in July included $23.4 million for HealthSource, but all of it was federal funding. Last week, Ferguson said she had recently learned that federal officials want the state to chip in $4.6 million to leverage additional federal money. The request surprised lawmakers.
She quickly backtracked, saying Tuesday that state funds wouldn't immediately be needed after all because of the "cooperation and support" from federal officials. She said they had concerns over discussions in Rhode Island about possibly abandoning HealthSource.
Ferguson has said that walking away from HealthSource would be a mistake and that investing in it will yield returns, eventually bringing down skyrocketing health care costs.
She said that ratepayers will still have costs to bear if Rhode Island uses the federal exchange and that she's trying to bring down the annual operating cost to about $16.9 million if HealthSource remains in state hands.
Mike Stenhouse, chief executive of the Rhode Island Center for Freedom & Prosperity, testified in favor of scrapping it. He called it "popular spin" that HealthSource is a great success, calling it a financial burden instead.
"One way or another, someone has to pay for this costly mandate," he said, according to his written testimony. "Rhode Island simply does not have a large enough insurance base or tax base to take on this high-priced burden."
About 29,000 signed up for individual coverage through HealthSource during the first open enrollment, which ended March 31.