Gov. Asa Hutchinson told a national organization of state legislators on Friday that Arkansas is "moving away" from plans to build its own health insurance exchange for individual consumers.
But Arkansas' exchange for small-business employees, which opened to enrollment in November, could play a role in offering subsidized coverage to Medicaid-eligible adults under his proposal for a program that would be known as Arkansas Works, he said.
Small-business exchanges are part of the Small Business Health Options Program (SHOP) created by the 2010 Patient Protection and Affordable Care Act that also allowed states to expand Medicaid coverage.
"I'd like to be able to integrate that SHOP exchange with the employers who are going to take advantage of the employer-based insurance coverage through the Medicaid expansion" under Arkansas Works, Hutchinson told members of the National Conference of State Insurance Legislators during his address to the group at its spring meeting at the Little Rock Marriott.
On its website, the organization says its purpose is to help legislators make informed decisions on insurance issues and "declare opposition to federal encroachment of state authority to oversee the business of insurance."
Hutchinson's remarks came a week after state Sen. David Sanders, R-Little Rock, said he favors dropping the effort to build an exchange for individual consumers unless more support emerges for making it part of the overhaul of the expanded Medicaid program.
Asked, after the speech Friday, if Arkansas is "definitely" dropping its plans for a state-based exchange for individual consumers, Hutchinson said, "It's definite in my mind, and it also seems to be definite in Sen. Sanders' mind."
"I think there's a consensus that we should not move forward with the individual exchange," Hutchinson said.
As for his suggestion that the small-business exchange could be used to offer coverage subsidized by Medicaid, he said, "that's an option or a possibility down the road. But it's going to take us a while to get there, and it's not part of what we need right now for Arkansas Works."
The Arkansas Health Insurance Marketplace, a nonprofit organization created by the Legislature in 2013, was awarded a $99.9 million federal grant in December 2014 to build the individual and small-business exchanges.
Money from the grant can be used to establish an exchange and pay for up to one year of operations.
Cheryl Gardner, the marketplace's director, said she expects to have spent about $17 million from the grant by the end of this year.
After that, the grant money can't be spent on the small-business exchange's operations, she said. The grant is set to expire at the end of 2017 although the state could apply for an extension. The state hasn't been given a deadline on when it must decide whether to move forward with the individual exchange.
Created under the Affordable Care Act, exchanges are meant to help small-business owners or consumers compare plans offered by different insurance companies.
Individual exchanges also make federal tax-credit subsidies available to consumers who don't qualify for Medicaid and who have incomes of up to 400 percent of the federal poverty level: $47,080 for an individual, for instance, or $97,000 for a family of four.
The marketplace's board had planned to set up an exchange for individual consumers this year for coverage that would start in 2017.
But at Hutchinson's request, the board in September put its plans on hold until state leaders decide on changes to the state's expanded Medicaid program.
Hutchinson reiterated Friday that Arkansas Works wouldn't require the state to have an exchange for individual consumers.
The federal exchange, accessible through the healthcare.gov website, "is working," he said.
"I haven't heard any complaints about it."
Sanders, once a key backer of the effort to build an individual exchange, said Friday that he still supports the idea as a way of moving low-income adults and children off the Medicaid program and into private, subsidized coverage that would not be governed by Medicaid rules.
But, he said, "Any type of innovative approach like that would take a robust waiver and probably a lot of head knocking with the feds, and I don't really see a willingness of some our folks to undertake that type of innovative effort."
Sanders was a sponsor of the law creating the private option, which uses Medicaid funds to buy coverage on the state's federally run exchange for individual consumers.
The state established the program in 2013, under a Republican-controlled Legislature and Democratic Gov. Mike Beebe as a primary way of extending Medicaid coverage to adults with incomes of up to 138 percent of the federal poverty level: $16,243 for an individual or $33,465 for a family of four.
More than 212,000 Arkansans were covered under the private option as of Jan. 1.
Almost 23,000 others made eligible by the Medicaid expansion were being covered as of Jan. 31 under the traditional, fee-for-service Medicaid program. Tens of thousands of others had been approved for coverage but had not yet completed enrollment.
Under Arkansas Works, Hutchinson, a Republican who took office last year, has proposed charging premiums of about $19 a month to adults with incomes of at least the poverty level and referring unemployed, able-bodied, enrollees to job-training programs.
Currently, private-option enrollees with incomes above the poverty level are encouraged to contribute up to $15 a month to "independence accounts" to help pay the cost of their medical care.
Private-option enrollees with incomes below the poverty level aren't required to contribute toward the cost of their medical care. Hutchinson has said he doesn't plan to immediately change that.
Hutchinson has said he also wants the Medicaid program to stop paying for up to three months of medical expenses incurred by private-option enrollees before they apply for coverage. Instead, he supports having the coverage start at the time of the application.
The Legislature will decide on the changes during a special session that Hutchinson plans for April 6.
Mike Castleberry, chairman of the Arkansas Health Insurance Marketplace board, said that scrapping the individual exchange project is "probably a good decision, based on the things the governor" and legislators have discussed over the past several months.
At the time the board applied for the $99.9 million grant in 2014, it didn't know what shape the proposals to change the private option would take or how well the federal exchange would function, he said.
In a Dec. 16 report to the marketplace board, the Boston-based Public Consulting Group said the state could use the small-business exchange to allow employers a simplified way to offer subsidized coverage under Arkansas Works.
The state could also seek a federal waiver allowing it to offer tax-credit subsidies through the exchange to employees who don't qualify for Medicaid, the report suggested.
Currently, the small-business exchange offers a tax credit to businesses with fewer than 25 employees that pay average wages of less than $50,000.
As of Wednesday, 163 employees, along with 49 spouses or dependents, from 41 businesses were enrolled in coverage through the state-run small-business exchange, said Max Greenwood, a spokesman for Arkansas Blue Cross and Blue Shield.
In addition, 61 employees and 42 spouses or dependents from 14 businesses were enrolled through the federal exchange, Greenwood said.
The insurer is the only one offering coverage through the small-business exchange.
"With all the innovative and interesting things and opportunities we have on the SHOP side, I think it makes a lot of sense to focus on that and what we can accomplish over there," Castleberry said.
A Section on 02/27/2016