State Obamacare Exchanges Struggling With High Costs and Disappointing Enrollment

State-run health insurance markets that offer coverage under President Barack Obama’s health law are struggling with high costs and disappointing enrollment. These challenges could lead more of them to turn over operations to the federal government or join forces with other states.

Hawaii’s marketplace, the latest cautionary tale, was awarded $205 million in federal startup grants. It has spent about $139 million and enrolled 8,200 customers for individual coverage in 2015. Unable to sustain itself, the state marketplace is turning over sign-ups to the federal HealthCare.gov for 2016.

Twelve states and the District of Columbia fully control their markets. Experts estimate about half face financial difficulties. Federal taxpayers invested nearly $5 billion in startup grants to the states, expecting that state markets would become self-sustaining. Most of the federal money has been spent, and states have to face the consequences.

“The viability of state health insurance exchanges has been a challenge across the country, particularly in small states, due to insufficient numbers of uninsured residents,” said a statement from the office of Hawaii Democratic Gov. David Ige, announcing last month that his state’s sign-ups were being turned over to the federal government.