UnitedHealth Group is among five companies that have applied to offer coverage through Arkansas' health insurance exchange next year, a spokesman for the Arkansas Insurance Department said Tuesday.
Meanwhile, a spokesman for the state Department of Human Services confirmed that the state will impose a new restriction on participants in the state's so-called private option designed to limit the cost of the program, which uses Medicaid funds to buy coverage on the exchange for low-income Arkansans.
Starting next year, private-option enrollment will be limited to each insurer's cheapest silver, or midlevel, plan that offers only the benefits required by state and federal law, Human Services Department spokesman Amy Webb said.
Each company's plan will qualify for inclusion only if it is within 10 percent of the second-lowest cost option in the region, she added.
This year, those who qualify for the program can enroll in any silver plan in the region of the state where they reside, regardless of the price, as long the plan offers only mandated benefits.
"Raising the issue of price sensitivity has been something we'd talked about eventually doing since the Private Option began," Webb said in an email.
State officials "wanted to first make sure there was enough competition in the market to support the system," she wrote.
"Once that was in place, price sensitivity became a broader part of our purchasing strategy," she said.
Created under the 2010 Patient Protection and Affordable Care Act, Arkansas' federally run insurance exchange allows consumers to shop for coverage and apply for subsidies to help pay for it.
Under the private option, the state uses federal Medicaid funds to buy coverage for Arkansas adults with incomes of up to 138 percent of the poverty level: $16,105 for an individual, for instance, or $32,913 for a family of four.
Federal tax credit subsidies are available to many people who don't qualify for Medicaid and who have incomes of less than 400 percent of the poverty level: for example, $45,960 for an individual or $94,200 for a family of four.
According to the Human Services Department, more than 205,000 Arkansans were enrolled in the private option as of Feb. 15.
An additional 68,131 Arkansans who did not qualify for Medicaid were enrolled in exchange plans as of April 1, according to the Insurance Department.
Through a subsidiary, United Healthcare of Arkansas, UnitedHealth Group has applied to offer bronze, silver and gold-level plans on the exchange in all seven coverage regions of the state, Insurance Department spokesman Seth Blomeley said.
The metal levels are based on the percent of a typical patient's medical expenses the plan is designed to cover -- 60 percent for bronze, 70 percent for silver and 80 percent for gold.
For private-option enrollees, the Medicaid program provides subsidies that reduce or eliminate the enrollee's required out-of-pocket spending for medical care.
Arkansas Blue Cross and Blue Shield, the national Blue Cross and Blue Shield Association, St. Louis-based Centene Corp. and QualChoice Health Insurance also have applied to continue offering plans in every coverage region, Blomeley said.
Three of the companies hope to continue offering bronze, silver and gold plans, while QualChoice, which currently offers plans in all three tiers, applied to offer only silver and gold plans, Blomeley said.
The deadline for the submissions was April 8.
On its website, UnitedHealth Group describes itself as the country's largest health insurance company. As of Dec. 31, the company's subsidiaries covered more than 61,000 Arkansans in comprehensive health plans, including about 8,000 in the individual market and 53,000 in employer plans, according to the Insurance Department.
Those totals do not include people in plans administered by UnitedHealth Group companies but funded by an employer, rather than by the insurance company.
Arkansas Blue Cross and Blue Shield has the largest enrollment, with more than 450,000 people in plans funded by the company or its national affiliate.
That included Arkansans enrolled in exchange plans. As of Tuesday, nearly 191,000 Arkansans were in the plans offered on the exchange by Arkansas Blue Cross or its national affiliate, Arkansas Blue Cross spokesman Max Greenwood said.
She said her company welcomes UnitedHealth Group's bid to offer plans in the exchange.
"We've always thought, the more competition, the better for consumers," Greenwood said.
This year, UnitedHealth Group is offering plans on exchanges in 23 states, according to a news release the company issued last year.
A company spokesman didn't return a call seeking comment Tuesday.
Sen. David Sanders, R-Little Rock, and a sponsor of the law that created the private option, said the Medicaid-funded program was a "significant reason" UnitedHealth Group decided to apply to offer plans on Arkansas' exchange.
"It's tremendous that in 2016 Arkansans will have more choices for their health care on the exchange and that the state is drawing in more competition," Sanders said.
That competition, combined with the criteria limiting the cost of private-option plans, should help hold down premiums next year, he said.
The companies' proposed rates for next year are due to the Insurance Department by May 14.
The rates and other plan details are submitted for approval to the U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services.
Open enrollment for coverage starting in 2016 runs from Nov. 1.-Jan. 31.
Of the four companies offering plans on the exchange this year, only QualChoice did not have silver plans with premiums within 10 percent of the second-cheapest company's silver plan premium in each coverage region, according to Insurance Department records.
In the central region, for instance, the monthly premium for a 35-year-old in a QualChoice silver plan is $356.05. That's 17 percent higher than the $303.21 premium for the Blue Cross and Blue Shield's cheapest silver plan.
Arkansas Blue Cross and Blue Shield has the region's cheapest plan that qualifies for the private option. The premium for a 35-year-old for that plan is $285.87.
QualChoice CEO Mike Stock said about 30,000 private-option enrollees across the state are in QualChoice plans.
People who are in private-option plans this year that are excluded from the program next year will be able to choose another plan, Webb said.
Those who fail to choose another plan will be moved to a plan offered by the same company if the company has a plan that meets the private-option criteria.
If the company does not have a plan meeting the criteria, the enrollee will be assigned to another plan offered by another company according to a formula designed to help each company reach a minimum market share.
Joe Thompson, director of the Arkansas Center for Health Improvement, said lower premiums for private-option plans will help anyone shopping for coverage in the exchange.
That's because the premium for silver plans is the same whether it's paid directly by a consumer, by a consumer who qualifies for tax credit subsidies, or by the Medicaid program on behalf of a private-option enrollee.
The private-option plan criteria creates "a pretty big price pressure point in a downward direction," Thompson said.
Metro on 04/15/2015