The fee a state agency collects from insurance companies that offer plans on the state's health insurance exchange would go up in 2018 under a recommendation by the agency's board on Wednesday.
During a daylong retreat in west Little Rock, the Arkansas Health Insurance Marketplace board of directors unanimously recommended that the Health Insurance Marketplace receive a fee in 2018 equal to 2 percent of the premiums for the plans sold on the exchange, up from the 1.5 percent the board recommended for next year.
The total fee collected by the Health Insurance Marketplace also would include money to pay the federal government for use of its enrollment system for individual consumers.
Assuming the federal fee stays the same, the total fee would increase in 2018 from 3 percent to 3.5 percent, the same amount insurance companies pay to the federal government now.
Gov. Asa Hutchinson has cited lowering the overall fee from 3.5 percent to 3 percent as a key reason for the state taking over responsibility for the individual-consumer health exchange from the federal government.
At the board meeting Wednesday, marketplace Director of Finance Tony Beeler presented projections showing the higher fee will be needed in 2018 to cover the marketplace's expenses.
Marketplace Executive Director Cheryl Gardner said the board can revise its recommendation if the projections change.
"A lot of things can happen," Gardner said.
Sen. David Sanders, R-Little Rock and chairman of the Arkansas Health Insurance Marketplace Legislative Oversight Committee, said after the meeting that he would like for the board to explore other options for ensuring the agency's financial sustainability.
"My preference would be to hold [the fee] pat for now at 3 percent," he said.
He said he plans to ask marketplace officials about the recommendation at a meeting next month.
Also on Wednesday the board approved a proposal for the Health Insurance Marketplace to manage part of the Arkansas Works Medicaid program under an agreement with the state Department of Human Services.
Projections presented to the board show the agency expects to receive about $1.6 million for its work on the program this year and $1.7 million next year.
Gardner said the bulk of that money will go to the Boston-based Public Consulting Group, which will handle much of the work under an expansion of a $3 million, two-year contract to help the marketplace manage the small-business exchange and other projects.
The Legislature created the Health Insurance Marketplace in 2013 to set up insurance exchanges for small businesses and individual consumers.
About 300 people receive coverage through the small-business exchange, which the agency set up last year using money from a $99.9 million federal grant.
But Hutchinson, who took office last year, has said he doesn't see the need for the agency to spend millions more grant dollars to build an Arkansas-based enrollment system for individual consumers.
Instead, he has proposed that the state continue to use the federal system, including healthcare.gov, while taking over responsibility for certifying the plans sold on the state's exchange and helping consumers enroll.
As part of the move, the federal fee will drop from 3.5 percent to 1.5 percent.
The Health Insurance Marketplace, which doesn't currently collect a fee, has said it plans to begin collecting a 3 percent fee as soon as Dec. 1 that would continue through 2017 to cover the 1.5 percent federal fee and support its own operations.
Under the Health Insurance Marketplace board's recommendation, the agency would charge a fee in 2018 that would be high enough to ensure it can pay the federal fee and collect a 2 percent state fee. If the federal fee stays the same, that would mean the total fee would increase to 3.5 percent, with the total revenue from the fee increasing from about $10 million in 2017 to $13 million in 2018
The increase will be needed in part because the Health Insurance Marketplace likely won't be able to spend money from its federal grant after next year, Gardner said.
The grant is the agency's primary source of operating revenue this year. Although the funds can't be spent on ongoing expenses after the end of this year, the marketplace expects to spend $12.6 million in grant funds on the design, development or implementation of new parts of the state's exchanges, according to the agency's projections.
The agency's projections are based on assumptions that premiums for plans on the state exchange will increase 9 percent each year and that enrollment will increase 5 percent each year.
Even with a fee increase in 2018, the Health Insurance Marketplace expects its expenses to exceed revenue that year by $277,429.
After that, revenue from the fee is expected to increase along with premiums and enrollment, providing excess revenue of $584,238 in 2019 and $1.7 million in 2020, assuming the state fee stays at 2 percent.
Under Act 1500 of 2013, which created the Health Insurance Marketplace board, the board's recommendation on a fee for 2018 is required by Oct. 1.
The recommendation will go to the legislative oversight committee, which is required to report the board's recommendation, along with the committee's own opinion, to House Speaker Jeremy Gillam and Senate President Pro Tempore Jonathan Dismang by Jan. 1.
The committee last week approved the the board's recommendation of an overall 3 percent fee for 2017.
An agreement to help the state use Medicaid funds to subsidize insurance for low-income small-business employees will provide another source of revenue for the marketplace.
The agreement, dated Aug. 17, calls for the state Department of Human Services to pay the Health Insurance Marketplace $135,200 in October and up to about $2.8 million during the first half of next year for its work on the program, which is a key part of the Arkansas Works law supported by Hutchinson and passed this year.
The agreement calls for the Health Insurance Marketplace to verify the eligibility of employers and employees and help them enroll, dispense the Medicaid subsidies to employers, operate a call center to answer questions from employers and employees and establish an Internet portal for employers and employees.
The agreement also says the Human Services Department may direct the Health Insurance Marketplace to market the program to insurance agents.
The Health Insurance Marketplace also plans to spend $7 million in grant funds next year to commission the development of a "premium aggregator," which would allow employees who are covered by plans on the small-business exchange to receive contributions from multiple employers.
In his remarks at the board retreat, Michael Leavitt, a former governor of Utah who was U.S. secretary of Health and Human Services for four years under President George W. Bush, called premium aggregator a "strong and powerful idea" that would allow businesses to more easily help pay the cost of their employees' coverage.
"Someone needs to make it work, because it's so critical in my view," he said.
Metro on 09/22/2016