A state-created nonprofit Wednesday decided that it will aim to set up a health insurance exchange in 2016, instead of next year, that would replace the exchange set up for the state by the federal government.
At a meeting in Little Rock, the Arkansas Health Insurance Marketplace Board also decided that it will still request funding to establish a state-run exchange for small businesses next year.
The 4-2 decision came after board members learned that setting up an individual market exchange next year, in time for coverage that would start in 2016, could require a rush to build the technological infrastructure required to allow people to shop for coverage, apply for subsidies and enroll. Opting to set up the exchange in 2016 means coverage would start in 2017.
Small-business exchanges are simpler to set up than individual exchanges, which must be able to determine whether consumers are eligible for subsidies to help them buy coverage, Christian Jones, a consultant with the Boston-based Public Consulting Group, told the board.
Board member Fred Bean, president of Bean Hamilton Corporate Benefits in Little Rock, noted that Arkansas' federally run exchange already covers more than 211,000 people, most of whom are enrolled in Medicaid-funded plans under the so-called private option.
Meanwhile, only about 60 people are enrolled in plans on the small-business exchange, established under the federal Small Business Health Options Program, state Insurance Department spokesman Seth Blomeley said.
"We do not have a successful, functioning SHOP program today," Bean said.
Establishing the small-business exchange first "sends a message to the citizens of the state that we're moving forward, we're doing what we were asked to do, but we're not doing it with a great deal of risk," Bean said. "We're doing it with control."
Arkansas Gov. Mike Beebe would like to see the transition to a state-based exchange for individuals happen sooner, but doesn't object to the board's decision, spokesman Matt DeCample said after the meeting.
"A transition is going to take some time," DeCample said. "If that's what the board thinks is best, then that's what we'll do."
The U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services operates individual market exchanges, which allow people to enroll for coverage and apply for subsidies to help pay for it, in Arkansas and 35 other states. The remaining states opted to set up their own exchanges.
Beebe, a Democrat, had supported establishing state-run exchanges in Arkansas in time for the initial open enrollment period that began last fall, but, citing opposition from the Republican-controlled Legislature, abandoned the idea in favor of a partnership agreement with the federal government.
Under the partnership, Arkansas assists consumers and helps regulate the plans on the federally run exchanges.
A law passed by the Legislature last year created the Health Insurance Marketplace Board and directed it to decide whether Arkansas should take over the operation of the state's exchange as early as July 1 of next year.
The board had planned to request federal funding with a goal of starting operations for both exchanges in time for the open enrollment period that will start Oct. 15, 2015.
Jones told board members that the Public Consulting Group had identified only one state -- Rhode Island -- with a successful exchange that set up the computer system for its exchange in that amount of time.
Rhode Island began enrollment in its individual and small-business exchanges 10 months after it awarded a contract to a company to build the technological system it needed, Jones said.
To meet that timeline, Jones said, the Arkansas board would need to begin soliciting proposals from technology companies this month even though the next opportunity to apply for a federal grant that would fund the project is more than a month away.
Health Insurance Marketplace Director Cheryl Smith noted that two states that are using the federal exchange this year are hoping to set up the technology for their own exchanges on faster timelines.
Idaho's exchange board in February announced that it had awarded a $32.5 million contract to Palo Alto, Calif.-based Getinsured for the design and implementation of the computer system for Idaho's exchange. Smith said Idaho is essentially "renting" technology -- paying Getinsured for the use and customization of software that the company has already developed.
Maryland officials in April decided to revamp the state's glitch-plagued exchange using technology from Connecticut's exchange.
Board member John Denery, director of life and health insurance at Stephens Insurance in Little Rock, favored requesting the funding with the aim of starting operations next year, while leaving open the option to change the start date later.
That would give the board the opportunity to learn how the Idaho and Maryland exchanges function during the open enrollment period that starts Nov. 15. Under that scenario, the board in December would re-evaluate the planned 2015 start date for Arkansas' state-run exchanges.
"I'm not saying it's going to be hard, maybe even stupid, but I do think it's ridiculous to make a decision about something we have no idea about, so why wouldn't we wait?" Denery said.
Board member Chris Parker, a Little Rock attorney, said the 2016 start date for the individual exchange would aid discussions with the state Insurance Department on an agreement for how a transition to a state-run exchange would occur. That agreement is needed as part of the request for more than $100 million in federal funding, which the board plans to submit to the Centers for Medicare and Medicaid Services on Oct. 15.
The last opportunity to apply for the funding is Nov. 14.
Human Services Department Director John Selig, a nonvoting member of the board, said aiming for a 2015 start is "not a reasonable option for the individual market given the risk, and I don't think we're going to hear enough things in December to reduce that risk."
Bean, Parker and board members Annabelle Imber Tuck and Greg Hatcher, both of Little Rock, voted for the timeline adopted by the board. The board didn't record a "no" vote.
Vice Chairman Steve Faris of Malvern didn't vote in favor of the adopted timeline but said after the meeting that he didn't have an objection to it.
Board member Jerry Jones of Cabot participated in part of the meeting by phone, but was not participating when the vote was taken. While participating in the meeting, he said he supported the tentative 2015 start date for the exchanges favored by Denery.
Board member Mike Castleberry of Little Rock was absent. Chairman Sherrill Wise of Little Rock votes only to break a tie.
Smith said the board's decision makes "eminent sense," and she "was never tied" to taking over the individual exchange next year.
"There's a tremendous learning curve here," Smith said. "Good for them that they recognized that and good for them to put a toe in the water and take a phased approach" by starting the small-business exchange next year.
Also on Wednesday, the board voted to reappoint Wise, Faris and Parker to their positions as officers for an additional year.
Bean, who made the motion for the officers to keep their positions, said Wise, vice president and treasurer at Dillard's Inc., has done an "amazing job" as chairman, adding, "We need as much continuity as we can."
A Section on 09/11/2014