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State seeks grip on health insurance exchange

It asks to take helm but rely on U.S. for insurance sign-ups by Andy Davis | June 2, 2016 at 5:45 a.m. | Updated June 2, 2016 at 4:56 a.m.

Gov. Asa Hutchinson wants the state to take over responsibility for its health insurance exchange for individual consumers but continue enrolling them in coverage through the mechanisms of the federal system, his spokesman said Wednesday.

Arkansas officials hope approval of the request by federal regulators will lower fees paid by insurance companies and help slow premium increases.

Under a partnership agreement with the federal government, Arkansas already helps regulate the plans on the exchange, which cover more than 270,000 Arkansans.

If the exchange were designated as state-based, Arkansas would also have responsibility for certifying the plans. Federal rules also require state-based exchanges to conduct outreach and education campaigns aimed at encouraging enrollment and to hire "navigators" to help consumers sign up.

Hutchinson spokesman J.R. Davis said having its own exchange would allow Arkansas to lower the fees paid by insurers that offer plans on the exchange.

Currently, the insurers pay the federal government fees equal to 3.5 percent of the premiums they collect for the plans.

If the state takes over responsibility for the exchange, the federal government will stop charging the fee. Instead, starting next year, Arkansas would pay the federal government a fee equal to 1.5 percent of the companies' premiums.

To pay that fee and cover other costs associated with the exchange, the Arkansas Health Insurance Marketplace, a nonprofit agency created by the state Legislature, would charge its own fee to insurers.

The amount of that fee hasn't been determined, but Davis said it would be lower than the 3.5 percent fee charged by the federal government.

Hutchinson requested the state-based exchange designation in a one-page letter to U.S. Health and Human Services Secretary Sylvia Burwell dated May 24.

"In order to align with our health reform efforts, I have determined the best course of action is to have the Arkansas individual exchange model be a State-based Exchange on the Federal Platform (SBE-FP) effective Plan Year 2017," Hutchinson said in letter.

Davis said Burwell had not approved the change as of Wednesday.

"We're very optimistic" that the request will be granted, he said.

According to the federal regulations issued in March, the 1.5 percent fee is intended as a transitional rate for state-based exchanges using the federal technology but doesn't cover the federal government's full costs. Federal officials said in the rules that they expect the fee to be increased at some point after 2017.

If Hutchinson's request is granted, Arkansas would become one of 13 states that are considered to have state-run exchanges for individual consumers. Washington, D.C., also has its own exchange.

Created under the 2010 Patient Protection and Affordable Care Act, exchanges allow consumers to shop for coverage and apply for subsidies to help pay for it.

Arkansas also uses Medicaid funds to buy coverage on the state's federally operated exchange for low-income adults under the so-called private option. The federal exchange fee isn't applied to the private-option plans.

Since November, the Arkansas Health Insurance Marketplace, an agency created by the Legislature in 2013, has operated a state-based exchange offering coverage to small businesses.

But at Hutchinson's request, the agency last year put on hold its plan to establish a state-based exchange for individuals. The agency was using money from a $99.9 million federal grant to create the state-run exchange.

Davis said Wednesday that the governor still doesn't want the state to spend millions of dollars to set up and operate its own electronic enrollment system.

But taking responsibility for the exchange will save Arkansas consumers money while allowing state leaders to keep their options open when a new U.S. president takes office next year, Davis said.

The federal regulations issued in March outlined the option for states to have state-based exchanges while paying to use the federal enrollment system, call center and online enrollment portal, accessible at

Mike Castleberry, chairman of the Health Insurance Marketplace's board, said the option was at first available only to states such as Oregon and Nevada that had set up their own enrollment systems, then abandoned them after being unable to fix widespread technical problems.

"We said, 'But wait, we haven't failed. We've done really, really well. But we'd still like to be able to get a good deal, too,'" Castleberry said.

He said the board will likely ask permission to use federal grant money -- currently, the board's only revenue source -- to pay for the outreach efforts during the open-enrollment period that begins Nov. 1.

In previous years, the federal government has awarded grants to nonprofit groups to provide navigators in the state.

Through contracts with nonprofit groups, the Arkansas Insurance Department also used federal grant money to hire more than 500 outreach workers in 2013.

That program ended after special language attached to the appropriation bills of the Insurance, Health, and Human Services departments prohibited those agencies from promoting enrollment after June 30, 2014.

Those who have received coverage through the federally run exchange include more than 212,000 Arkansans who were enrolled in private-option plans as of Dec. 15 and more than 65,000 adults who were enrolled in non-Medicaid plans as of May 15.

Arkansas created the private option in 2013 as a primary way of extending coverage to adults with incomes up to 138 percent of the poverty level: $16,394 for an individual, for instance, or $33,534 for a family of four.

Federal tax-credit subsidies are available for many people who don't qualify for Medicaid and have incomes below 400 percent of the poverty level: $47,080 for an individual, for example, or $97,000 for a family of four.

Sen. David Sanders, R-Little Rock and chairman of a legislative committee that monitors the Arkansas Health Insurance Marketplace, has said in the past that Arkansas would have more flexibility in making changes to Medicaid and other health care programs if it sets up its own exchange, including the enrollment system.

But he said Wednesday that Hutchinson's proposal is "probably a better approach for the state."

"It still keeps options open in the state," Sanders said. "We may look ahead a year from now and have completely different options in terms of what a state can do."

A Section on 06/02/2016

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