Gov. Asa Hutchinson's plan to move about 60,000 Arkansans off Medicaid will create an influx of enrollees in non-Medicaid plans on the state's health insurance exchange, potentially allowing the exchange to avoid raising the fee it collects from insurance companies, exchange officials said Tuesday.
In light of the expected increase in sign-ups, the Arkansas Health Insurance Marketplace Board of Directors recommended that the portion of the fee that goes to the marketplace be reduced next year from 1.5 percent of a company's exchange plan premiums to 1 percent.
That reduction would allow the total fee in Arkansas to remain at 3 percent even if the federal government follows through on a stated plan to raise its fee.
In a notice published in December, the U.S. Department of Health and Human Services said it planned to raise the fee it charges to states such as Arkansas to 2 percent in 2018, up from the 1.5 percent it charges now.
Previously the marketplace board had recommended that the state's portion be increased in 2018 to 2 percent, which would bring the total fee to 4 percent.
Insurance companies pass along the fee to consumers through monthly premiums. The federal government also ends up paying the fees through subsidies it provides to low-income consumers.
According to Menlo Park, Calif.-based Kaiser Family Foundation, Arkansas is among five states that are considered to have state-based health insurance exchanges but pay the federal fee, which allows consumers in those states to sign up through healthcare.gov.
An additional 11 states and the District of Columbia operate their own exchanges and enrollment systems, and don't have to pay the federal fee.
In the remaining states, which have federally run exchanges, insurance companies pay a 3.5 percent fee for the use of the federal system.
The lower fee in Arkansas, compared with states with federal exchanges, "is a value that [the marketplace] is providing in its existence," Richard Albertoni, a manager with the Boston-based Public Consulting Group, said at the board meeting.
Created by the state Legislature in 2013, the marketplace set up a state-run exchange for small-business health plans in 2015 using money from a $99.9 million federal grant.
At the request of Hutchinson during his first year in office, the marketplace scrapped its plan to use the remaining grant money to establish an enrollment system for individual consumers.
Instead, the agency took over responsibility for certifying the plans sold on the individual exchange and providing information to consumers while continuing to rely on the federal enrollment system.
Tony Beeler, the marketplace's director of finance, said Tuesday he expects enrollment in the individual exchange to increase by at least 45,000 people as a result of Hutchinson's plan to shrink Arkansas Works, as the expanded part of the state's Medicaid program is known.
Hutchinson has said he hopes to limit eligibility to Arkansans with incomes below the poverty level, instead of below 138 percent of the poverty level, which would result in about 60,000 people losing Medicaid coverage.
Beeler said he expects at least two-thirds of those people to sign up for coverage in non-Medicaid plans on the individual exchange, which makes federal tax credit subsidies available to many people with incomes of up to 400 percent of the poverty level.
The influx would bring total enrollment in non-Medicaid plans up to about 115,000, Beeler said.
The total amount collected from the fee would rise from about $9.5 million this year to about to about $16.9 million next year, he predicted.
The marketplace would keep $5.6 million from the fee, giving $11.3 million to the federal government.
This year, the fee is expected to provide the federal government and marketplace with about $4.7 million each.
Under the state's so-called private option, most of the more than 320,000 people enrolled in the state's Medicaid expansion receive coverage through commercial plans offered through the exchange, with the Medicaid program paying the premium and providing other subsidies.
The marketplace fee is not charged on those premiums, however.
Hutchinson plans to seek state lawmakers' approval for the stricter eligibility criteria and other changes to Arkansas Works at a special session of the Legislature next week.
Catherine Kelley, the governor's senior health policy adviser, told the marketplace board Tuesday that Hutchinson will also propose moving responsibility for monitoring the marketplace to the Legislative Council, the Legislature's governing body when lawmakers are not in session.
Act 1500 of 2013 gave responsibility for monitoring the marketplace to the Arkansas Health Insurance Marketplace Legislative Oversight Committee, which was created by the law and is not part of the council.
Hutchinson will propose that the council study whether the state should disband the marketplace as a separate agency and move its responsibilities under the Insurance Department, Kelley said.
Kelley also said Tuesday that the governor "is inclined toward" transferring the marketplace's functions to the Insurance Department as part of an effort to streamline government bureaucracy.
After speaking with lawmakers, however, Hutchinson decided to not to push the idea during the special session, Kelley said.
The governor "would still like to hear all the counterarguments and work through that process," Kelley said.
Insurance Commissioner Allen Kerr told the marketplace board last week that Hutchinson had asked the department to explore taking over the marketplace's responsibilities and transferring responsibility for operating the small business exchange to the federal government.
He noted that Arkansas Blue Cross and Blue Shield, the only company offering plans on the small business exchange, will stop participating next year.
Company spokesman Max Greenwood on Tuesday confirmed the company's decision, saying the number of businesses enrolled -- 79, according to the marketplace -- doesn't justify the administrative cost.
Greenwood said the company is evaluating whether to continue participating in the exchange for individual consumers. She noted that more than half of the company's customers with exchange plans receive extra subsidies that lower their deductibles and other out-of-pocket costs.
President Donald Trump's administration hasn't said whether it will continue an appeal of a federal judge's ruling that found the subsidy payments were not authorized by Congress.
Metro on 04/26/2017