Legislators accept report on health exchange fee

The Legislative Council on Friday accepted a subcommittee’s report on how much insurance companies should pay in 2020 to support the operations of the state’s health insurance exchange.

At a meeting in September, the Arkansas Health Insurance Marketplace’s board tentatively decided to set the fee it charges insurers at 4.25 percent of the premiums for plans sold through healthcare.gov.

On Thursday, after some lawmakers said the marketplace appeared to be building up an excessive amount of reserves, the council’s marketplace oversight subcommittee recommended lowering the fee to 4 percent.

Companies in states that don’t have their own health insurance exchanges, and rely solely on the federal government to provide subsidized coverage under the Patient Protections and Affordable Care Act, pay a 3.5 percent fee.

Insurance companies pass along the cost of such fees to consumers in the form of higher premiums.

With no members objecting, Sen. Bill Sample, R-Hot Springs and a chairman of the council, on Friday declared the subcommittee’s report “reviewed.”

Created by the Legislature in 2013, the marketplace certifies the insurance plans sold in the state through healthcare. gov, promotes enrollment and pays for a call center with operators who help consumers sign up.

Almost 53,000 Arkansans were enrolled in such plans as of Nov. 1, according to the Arkansas Insurance Department.

The annual open-enrollment period for coverage in such plans started on that day and will end Dec. 15.

This year, the marketplace fee is equal to 3 percent of the premiums for the plans sold through the federal website. Companies that sell plans on the site pay the fee and then pass along the cost to consumers through higher premiums.

Two-thirds of the money collected goes to the federal government to pay expenses associated with the website, and the marketplace keeps the rest.

Next year, the fee is set to increase to 4.25 percent. That includes an increase in the federal fee from 2 percent to 3 percent of the insurance premiums and an increase in the marketplace’s portion from 1 percent to 1.25 percent of the premiums.

Under the oversight subcommittee’s recommendation, the marketplace’s portion of the fee would be lowered in 2020 to 1 percent of the premiums. That would lower the overall fee to 4 percent, assuming the federal portion of the fee stays at 3 percent.

The subcommittee made its recommendation in accordance with Act 1500 of 2013, which calls on the council, a panel of lawmakers that meets when the Legislature is not in session, to report to the leaders of the House and Senate by Dec. 1 its opinion on the fee that the marketplace should collect in 2020.

The law also calls for the Legislature to “establish a reasonable initial assessment or user fee and reasonable increases or decreases in the amount of future assessments or user fees” to support the marketplace.

The Legislature has never established a fee, however. The marketplace began collecting a fee last year after concluding it had the authority to do so.

Rep. Deborah Ferguson, D-West Memphis and a chairman of the oversight subcommittee, said Thursday that the Legislative Council’s recommendation is not binding and that the marketplace’s board has the final say on the fee amount.

The board likely will discuss the recommendation at its next meeting, which hasn’t been scheduled, Mark Meadors, the board’s vice chairman, said Friday.