Insurance marketplace dissolves, transfers assets

The day before the Arkansas Health Insurance Marketplace’s assets were scheduled to be transferred to the Arkansas Insurance Department, members of the marketplace’s board debated what to do with the $1.6 million in the marketplace’s bank accounts.

“Since it’s a health initiative, I suggest we give it to somebody like [Arkansas] Children’s Hospital,” board member John Womack said. “I’m sure UAMS could use it.”

Insurance Commissioner Allen Kerr, a nonvoting member of the board, responded that that “would not be a wise recourse.”

“One of the fears of the Legislature, the reason we had a short window of transition, was that that money would disappear,” Kerr said.

Act 107, signed by Gov. Asa Hutchinson last month, abolished the board, effective today, and transferred control of the state’s health insurance exchange to the department.

Ultimately, the board decided Thursday to leave the money in the accounts, which were scheduled to come under the Insurance Department’s control today.

Act 107 directed all of the marketplace’s funds and other assets to be transferred to the department.

Sen. Jason Rapert, R-Conway, who sponsored the legislation that became Act 107, said the board members “know that the intent was to transition all of the assets, all of the funds, to the Arkansas Insurance Department to continue to fulfill the obligations of AHIM.”

“I’m actually very surprised and disappointed that that even became a discussion point,” he said.

Rapert said he expects any funds from the marketplace that the department doesn’t need to cover expenses to be turned over to the state’s general revenue budget.

As the entity responsible for the exchange, the marketplace approved the health plans offered in the state through healthcare.gov and helped consumers sign up.

Those duties now become the Insurance Department’s responsibilities.

Insurance Department spokesman Ryan James said most consumers shouldn’t notice a difference.

The department will keep the marketplace’s consumer-oriented website, which had already been changed on Thursday to describe the marketplace as a division of the Insurance Department.

For the time being, the department will also continue paying the Arkansas Foundation for Medical Care to operate a call center for consumers, James said.

Act 107 calls for all of the marketplace’s contracts to be transferred to the Insurance Department, which can renegotiate them.

Once the contracts expire, the department will follow state procurement laws in re-bidding them, James said.

At the board’s final meeting Thursday, Chairman Mike Castleberry said he didn’t know of anything in Act 107 barring the marketplace from spending its remaining funds.

He noted that Kerr has said he won’t need that much money to take over the marketplace’s duties.

“The Legislature and the governor’s office expects that money to be transferred to the Insurance Department,” Kerr responded.

Other board members also expressed opposition to spending the money, which Nate Bell, the marketplace’s director, said could “create the perception that there was some hanky-panky.”

The board then adopted a resolution “regretfully” approving the dissolution of the marketplace as a nonprofit organization, effective at 11:59 p.m. Thursday, and transferring the marketplace’s assets to the Insurance Department.

The marketplace’s eight employees, excluding Bell, each received severance payments on Thursday ranging from $4,600 to $17,500, Bell said.

Bell, a former legislator who was hired Jan. 29 as the

marketplace’s interim director, said he was paid a total of about $15,000 under his contract, which called for him to be paid $5,000 every two weeks for up to three months. He did not receive a severance payment.

Bell took over from Angela Lowther, who resigned Jan. 24, effective Feb. 21, to “pursue new opportunities.”

The Legislature created the marketplace in 2013 to set up exchanges that consumers and small business would use instead of healthcare.gov.

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

But at 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.

Meanwhile, enrollment in the small-business exchange ended in 2017 because Arkansas Blue Cross and Blue Shield, the only company offering plans, dropped out.

According to the Insurance Department, 58,915 Arkansans were enrolled in individual plans offered through healthcare.gov as of March 1.

Kerr has said his department can absorb the marketplace’s duties at a cost of no more than $500,000 a year.

Starting next year, it will also be able to eliminate the portion of a fee charged to insurance companies that had supported the marketplace’s operations, he has said.

During the meeting on Thursday, Bell praised the employees, all of whom stayed with the marketplace after Act 107 was signed and helped with the transition “even though there’s been politicians slandering them.”

The marketplace staff and board should be proud that they succeeded in holding down premiums and establishing a competitive marketplace, he said.

“The Legislature in its infinite wisdom thinks government can do a better job,” Bell said. “Time will tell.”