Sole insurer on small- business exchange will leave.

Arkansas Blue Cross and Blue Shield has notified state officials that it will not offer plans next year on Arkansas’ health insurance exchange for small businesses, state Insurance Commissioner Allen Kerr said Tuesday.

At a meeting of the Arkansas Health Insurance Marketplace board of directors, Kerr also said Gov. Asa Hutchinson has asked the state Insurance Department to explore taking over the marketplace board’s functions “under a different structure” and have the federal government take over the small- business exchange.

Arkansas Blue Cross and Blue Shield is the only company offering plans through the small- business exchange, which is run by the Health Insurance Marketplace.

The plans cover 430 people from 79 businesses, marketplace spokesman Alicia McCoy said.

Hutchinson “looked at all sides of this — looked at the cost of [ the marketplace] under its current operation, the prospects of it being able to do enough volume to cover its expenses — and the numbers just aren’t coming together,” Kerr said.

He said Hutchinson wants to address the issue during a special session of the Legislature planned for next month.

Hutchinson spokesman J. R. Davis said the governor is “looking at everything,” but hasn’t decided whether to ask lawmakers to scrap the state marketplace.

Lawmakers at the special session will also consider Hutchinson’s proposals for changes to the expanded part of the state’s Medicaid program known as Arkansas Works.

Businesses with up to 50 employees can enroll in coverage through the small- business exchange. The exchange makes a tax credit available to businesses that have fewer than 25 employees and that pay average annual wages of less than $ 50,000.

A federal regulation has required Blue Cross to offer plans on the small- business exchange as a requirement for the insurer’s participation in the exchange for individual consumers.

The regulation applies to insurers controlling at least 20 percent of the market for small- business health insurance. The requirement expires next year, however.

An Arkansas Blue Cross and Blue Shield spokesman didn’t return a call seeking comment Tuesday.

State Sen. David Sanders, R- Little Rock, and chairman of a legislative committee that monitors the marketplace, said scrapping the marketplace is “worth considering.”

“I think what we will discuss and engage in is look at numbers, look at facts, look at plans, look at proposals and try to make a decision that’s in the best interest of the state and the best interest of the ratepayers,” Sanders said.

The Legislature created the Health Insurance Marketplace in 2013 to set up state- based exchanges that Arkansans would use instead of healthcare. gov to sign up for subsidized coverage under the 2010 Patient Protection and Affordable Care Act.

Using money from a $ 99.9 million federal grant, the marketplace board set up the small- business exchange in 2015.

But at Hutchinson’s request in his first year in office, the board scrapped its plans to establish a state- run exchange 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.

About $ 80 million from the 2015 grant has not been spent, McCoy said.

About 363,000 people are covered by plans offered through the individual exchange, including 300,000 whose coverage is subsidized with Medicaid funds under Arkansas Works.

Coverage for many of the other 63,000 people is subsidized through federal tax credits under the Affordable Care Act.

The marketplace collects a fee from insurance companies equal to 3 percent of the premiums for those non- Medicaid plans. Half of the money from that fee goes to the federal government to pay for operations of the federal enrollment system, and the other half pays for the marketplace’s operations.

The marketplace also had a contract with the Arkansas Department of Human Services to help small businesses sign up to offer subsidized, job- based coverage under Arkansas Works.

However, that contract, which called for the department to pay the marketplace up to $ 2.9 million, ended April 3, McCoy said.

Human Services Department spokesman Brandi Hinkle said only one business has signed up, so there’s no need for an outside entity to run the program.

The department plans to take over responsibility for the program, she said.

At its meeting Tuesday, the marketplace board decided to form a committee to discuss the proposal to transfer the marketplace’s functions to the Insurance Department.

The board also decided to seek advice from an outside attorney on whether they have the authority, under the state law creating the marketplace, to pursue such a change.

“I feel like we’re putting the cart before the horse,” board member Sherrill Wise said.