UPDATE: In which Breitbart claims CoveredCA will lose 234x as much as their entire budget this year.
OK, this is kind of amusing. Over at right-wing nutbag-conspiracy-theory-repository/occasional-real-news site Breitbart.com, there's an attack piece hyping up the expected 2016 individual insurance market rate increases, based on various recent articles such as Robert Pear's piece over at the New York Times last Friday, which I talked about this morning.
Needless to say, being Breitbart, they lay on the "OMG!! SKY IS FALLING!! MASSIVE RATE HIKES!!" stuff pretty thick, and as I've noted repeatedly, in some cases that may very well be true. I didn't bother reading most of it since I already know what it says.
However, there's one rather curious passage which did catch my eye:
Regulators for Covered California, the largest Obamacare exchange with 1.4 million members, have been mum on just how big their premium rate increase will be. But with the exchange already expected to lose $78 billion in the state fiscal year that began July 1, there is no state money for extra subsidies.
Huh. Um...ok, that's...interesting. A $78 billion deficit this year alone for Covered California?? That seems a wee bit...excessive, even by Breitbart standards.
For one thing, according to the actual Covered California 2015-16 budget (pg. 21), their entire budget is only around $333 million this year, and is expected to drop a bit to $310 million next year.
For another, as noted above (and as I noted just last week), CoveredCA has nearly $300 million in reserves, and expects to bring in around another $234 million via exchange enrollee fees ($13.95 per member per month, times an average of around 1.4 million effectuated enrollees per month).
The most obvious thought is that Breitbart made a simple typo...that they meant $78 million instead of $78 billion, and I guess that might be what they're referring to, since the CoveredCA projections do show a reduction in available funds at the end of the 2016-17 year...except that's only around a $41 million loss, around half the $78 million they're presumably claiming...and that's expected to start moving back up again the following year anyway.
The only other possibility I can think of is that they're referring to the state budget facing a $78 billion deficit...except that the entire 2016 California state budget which was just passed a few weeks ago totals "only" $118 billion anyway, and there's no way it can be run with a deficit making up 66% of the total. Besides, Covered CA's budget is completely separate from the CA state budget anyway.
Anyway, this is just one of those weird little mysteries. I'm used to Breitbart spouting nonsense, this one just seems extra weird because it's such an absurd number to be throwing around.
UPDATE 7/7/15 10:00am: Nope, they still haven't changed the $78B passage:
UPDATE 7/8/15 9:00am: Nope, still there.
UPDATE 7/8/15 1:38PM: EUREKA!!
Thanks to @icowrich for helping hunt down the source of the mysterious "$78 Billion deficit" figure!!
It looks like the author, Chriss W. Street, got this figure from an 18-month out of date budget projection mentioned in the San Diego Union-Tribune back in December 2013:
Covered California projects it will lose $78 million in the 2015-16 budget, and it is not clear how the health exchange plans to close that gap and become financially self-sustaining once federal grants run dry.
While the exchange says that it will increase revenue and trim expenses to bring its operating budget into balance, its budget documents make no definitive statements about how, exactly, it will reach financial equilibrium.
Of course, Mr. Street is still off by a factor of over 23,000% (put another way, the actual projected budget deficit is only 1/234th, or 0.43% as high as he claims in his story).
OK, obviously he made a typo by listing it as $78 billion instead of $78 million, but even if he fixed that error, he'd still be overstating the projected deficit by over 90%; it's currently projected to be $41 million, not $78 million...and is expected to be a one-time deficit followed by small but steady profits after that (or at least, a positive net balance sheet, since presumably CoveredCA isn't technically allowed to make a profit itself).
If the December 2013 budget projection was the only available one for CoveredCA, listing the projected deficit as $78 million (NOT billion!) would have been somewhat understandable...but it wasn't, and in fact CoveredCA released the updated 2015-16 budget back on May 13th, 2015...over 6 weeks before Mr. Street wrote his story. In addition, Street makes no mention whatsoever of the $300 million in reserves that CoveredCA currently has.
So no, he gets no pass from me for his error. He does not pass Go and he certainly does not receive $200 (or $78 billion).