Panelists say keep insurance fee high

Arkansas consumers and the state Medicaid program would continue to pay a higher fee in 2020 to support the operations of a state-run health insurance exchange under a recommendation by a committee on Tuesday.

This year, the fee collected by the Arkansas Health Insurance Marketplace is equal to 3 percent of the premiums of the non-Medicaid plans sold on the exchange.

Half the fee — which is expected to generate $8.3 million this year — goes to the federal government to pay expenses associated with the federal website, healthcare.gov, where consumers can enroll.

The other half goes to the state marketplace, which certifies the plans and helps consumers sign up.

The fee is set to increase next year to 4.25 percent to cover an increase in the federal fee, which will go from 1.5 percent to 3 percent.

As a result of the increase, the fee for the first time will be higher than what insurance companies pay in the 34 states without their own exchanges.

In those states, which rely solely on healthcare.gov, the companies pay a 3.5 percent fee. Companies in Arkansas and other states pass the fee along to consumers in the form of higher premiums.

At a meeting Tuesday, the Arkansas marketplace’s finance committee recommended keeping the state’s fee at 4.25 percent in 2020.

The recommendation will go to the marketplace board next month. Act 1500 of 2013, which created the marketplace, requires it to recommend the fee for 2020 to the Arkansas Legislative Council by Oct. 1.

The committee considered recommending a 4 percent fee in 2020 but decided that would be too financially risky.

According to projections by the marketplace staff, a 4.25 percent fee in 2020 would generate $14.3 million, leaving the marketplace with $938,250 after paying the federal share of the fee and other projected expenses.

A 4 percent fee would generate $13.3 million, leaving the marketplace with just $99,500 after paying expenses.

Board member Mark Meadors noted the revenue would be even lower if enrollment doesn’t meet expectations.

“I don’t want us to get in a bind,” he said.

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

The Legislature created the marketplace in 2013 to set up state-run exchanges individual consumers and small businesses would use instead of the federally managed healthcare.gov.

Using money from a $99.99 million federal grant, the Arkansas marketplace set up the small-business exchange in 2015.

But at Gov. Asa Hutchinson’s request during his first year in office, the agency scrapped its plans to use its remaining grant money to build an exchange for individual consumers.

Instead, the marketplace took responsibility for certifying the plans sold through healthcare.gov.

Meanwhile, enrollment in the small-business exchange ended last year because Arkansas Blue Cross and Blue Shield, the only insurance company offering plans through that exchange, dropped out.

A subcommittee of the Legislative Council is expected to recommend next month whether the marketplace’s responsibilities should be shifted to the state Insurance Department, a move Insurance Commissioner Allen Kerr said would save consumers millions of dollars.

Rep. Deborah Ferguson, D-West Memphis and a chairman of the subcommittee, said Tuesday she didn’t think the marketplace fee would be a big factor in the recommendation.

“I just think it’s a question of whether [the marketplace is] worth keeping, based on the original mission of AHIM,” she said.

Hutchinson is aware of the impending fee increase and is waiting on the subcommittee’s recommendation, spokesman J.R. Davis said.

The fee is based on the premiums paid by about 54,000 Arkansans who are enrolled in non-Medicaid plans offered through healthcare.gov.

Those consumers don’t end up paying the entire fee amount, however. That’s because insurance companies that offer such plans account for the fee when setting their premiums for all plans sold in the individual insurance market, including unsubsidized plans sold directly to consumers and Medicaid-funded Arkansas Works plans.

The fee pays for the marketplace’s administrative staff, health insurance “navigators” who help consumers enroll in plans, advertising aimed at encouraging people to sign up and a call center for consumers.

Meadors said the higher fee that Arkansas consumers will start paying next year, compared with those in states without their own exchanges, will be worth it for the help the marketplace offers to insurance companies, agents and consumers.

“If you’re just dealing with the feds, or you’re just dealing with the insurance company, it can be a nightmare,” he said.