Note 17. Exchange Revenue

The HHS recognizes its revenue from exchange transactions when goods and services are provided.  Total exchange revenue was $53 billion and $53 billion through September 30, 2007 and 2006, respectively.  The HHS exchange revenue primarily consists of Medicare premiums collected from beneficiaries. 

Premiums collected are used to finance Supplemental Medical Insurance (SMI) benefits and administrative expenses.  Monthly premiums paid by Medicare beneficiaries are matched by the Federal Government through the General Fund appropriation, Payments to the Health Care Trust Funds.  Section 1844 of the Social Security Act authorizes appropriated funds to match SMI premiums collected, and outlines the ratio for the match as well as the method to make the trust funds whole if insufficient funds are available in the appropriation to match all premiums received in the fiscal year.

The HHS pricing policy for the reimbursable agreements is to recover full cost and to incur no profit or loss.  In addition to revenues related to reimbursable agreements, the HHS collects various user fees to offset the cost of its programs.  Certain fees charged by the HHS are based on an amount set by law or regulation and may not represent full cost.   

Report Date: November 15, 2007

AFR Section II Links:

• Message from the Chief Financial Officer
• Office of Inspector General Transmittal
• Independent Auditor's Reports
• Financial Statements and Notes
• Required Supplementary Stewardship Information
• Required Supplementary Information