A legislative committee on Thursday recommended that Arkansas extend its regulation of the small-group health insurance market from businesses with up to 50 employees to those with up to 100 employees.
Arkansas Health Insurance Marketplace Legislative Oversight Committee chairman Sen. David Sanders, R-Little Rock, said the change would allow more businesses access to coverage through a state-run health insurance exchange that is expected to begin accepting sign-ups next month.
But Ryan James, a spokesman for the Arkansas Department of Insurance, said the department cannot make the change without action by the Legislature.
He cited Arkansas Code 23-86-303, which defines a small employer as one with two to 50 employees.
Act 1500 of 2013, which created the Arkansas Health Insurance Marketplace, a nonprofit that set up the small-business exchange, contains the same definition, he noted.
"There is only one entity that can change the law of Arkansas, and that is the General Assembly when in session," James said in an emailed statement.
The marketplace oversight committee approved the recommendation to expand the definition on a voice vote, with no members dissenting.
Sanders said he expects the small-business exchange to help expand employer-sponsored coverage in the state.
He noted that a consultant to a legislative task force has recommended seeking a federal waiver to provide subsidies through the exchange for low-income workers.
The state could also seek approval to allow employers more flexibility in how they offer coverage, Sanders said.
For instance, employers could provide a certain amount of money for each employee that the employee could use to pay for health insurance or other benefits or deposit in a health savings account.
"I think we're better off if we have more participation," Sanders said.
Sen. Linda Chesterfield, D-Little Rock, said she proposed the recommendation at Sanders' request.
"I'm not particularly concerned about whether there's 50 or 100," she said.
But she said she does support allowing more businesses to participate.
"I think it would do more good than harm," she said.
Arkansas is among more than 30 states that use federally operated health insurance exchanges for individual consumers and small businesses. The remaining states set up their own exchanges.
The Arkansas Health Insurance Marketplace received a $99.9 million federal grant last year to set up state-based exchanges for small businesses and individual consumers.
Reston, Va.-based hCentive installed the technology for the small-business exchange under a $7.2 million contract with the marketplace.
The marketplace board had planned to set up the individual exchange in time for enrollment to begin next fall but has put those plans on hold at the request of Gov. Asa Hutchinson.
Hutchinson has said he doesn't see the need for a state-based exchange for individual consumers but wants to wait until state leaders decide on changes to the state's private option and other parts of its Medicaid program before making a final decision on whether to go forward with the project.
The private option uses Medicaid funds to buy insurance on the state's federally operated exchange for individual consumers.
About 200 employees in Arkansas are covered under the federally run small-business exchange. Those policies will be transferred to the state-based small-business exchange once it begins operations.
The 2010 Patient Protection and Affordable Care Act required states to define small businesses as those with 100 or fewer employees starting next year.
On Oct. 7, however, President Barack Obama signed a law changing the definition of small businesses to those with 50 or fewer employees. The amendment allows states the option to set their own definition to include businesses with up to 100 employees.
Supporters of the amendment argued that businesses with 51 to 100 employees would face higher health insurance premiums if they were subject to the same regulations as smaller employers.
For instance, the Affordable Care Act requires policies sold to small businesses to cover certain benefits, and it prohibits insurers from charging higher premiums to companies based on workers' medical expenses. Instead, insurers can only set rates according to age, geographic area, family size and whether the employee uses tobacco.
Arkansas Insurance Commissioner Allen Kerr issued a bulletin Oct. 8 saying Arkansas would continue to follow state laws defining small businesses as those with 50 or fewer employees.
Metro on 10/23/2015