State-run exchange development on hold
On September 24, Arkansas Governor Asa Hutchinson said that the state’s progress towards creating a state-run health insurance exchange for individual plans is “on pause at this point” and that he’s communicated that information to HHS. Hutchinson went on to say that Heathcare.gov is working well, and that he’s not sure the state needs to push forward with plans for a state-run exchange, which involves additional risks and costs.
Hutchinson had previously voiced concerns about the benefits of proceeding with a state-run exchange.
On June 25, the Supreme Court ruled that subsidies are legal in the federally-run marketplace, which means there was no longer a concern that subsidies could evaporate and insurance markets could destabilize in states that use Healthcare.gov. Although the state has been working towards a state-based exchange for some time, and has obtained almost $100 million in federal funding to make the switch, the Court’s ruling removed some of the incentive to proceed with the transition, since subsidies are safe regardless of how the exchange is structured.
Following the Supreme Court’s decision, Arkansas Governor Asa Hutchinson asked the state to reconsider whether the move to a state-run exchange is still the best course of action: “I am convinced now more than ever that we need to proceed with caution to measure the costs to the taxpayers and the reliability of the outcome as we consider the potential of a state exchange.”
In mid-August, Governor Hutchinson reiterated his concerns about moving forward with a state-run exchange, saying: “Right now, we’re building a state-run exchange with a $99 million grant from the federal government, and I’m asking the question, why are we building the state exchange rather than relying on a continued partnership with the federal exchange?”
Prior progress towards state-run exchange
On June 15, Arkansas was one of three states that got conditional approval from the Obama Administration to operate a state-run exchange (the state currently has a partnership exchange, which is considered federally-run). At that point, the outcome of King v. Burwell was still up in the air, and there was a distinct possibility that subsidies for 50,000 people in Arkansas could have evaporated if the Supreme Court had ruled that subsidies were not legal in the federally-run exchange.
Although the state formally submitted their intent to establish a state-based exchange this spring, they’ve been in the process of working towards a state-based exchange since 2013. The board of the Arkansas Health Insurance Marketplace voted in mid-September 2014 to transition from its current partnership exchange to a state-run exchange. The plan was to have the Arkansas-run marketplace operational for individual for open enrollment in the fall of 2016, with coverage beginning in 2017. Small businesses were to be able to begin enrolling through the state-run exchange in the fall of 2015.
However, in March, lawmakers passed Senate Bill 343, which required the state to wait to proceed with establishing a state-run exchange until after the King v. Burwell ruling is announced. That put the Arkansas Health Connector‘s transition to a fully state-run model on hold, although lawmakers and the exchange board continued to work on the details of how the state-run exchange would work.
State-run small business exchange
Arkansas has also been working to create its own state-run small business (SHOP) exchange. The Arkansas exchange board had hoped that currently-enrolled small businesses would be seamlessly transitioned to the state-run exchange, but CMS notified the state that they will not be able to transfer the data, and small businesses would have to re-enroll through the new exchange. Hutchinson’s letter to HHS regarding his plans to pause development of the individual market state-run exchange did not include any mention of delaying the state-run small business exchange, which is scheduled to open in January 2016.
New exchange carrier for 2016
Five carriers will be be offering individual health plans in the Arkansas exchange in 2016, although two of them are owned by the same parent company:
- Arkansas Blue Cross Blue Shield
- Celtic Insurance Company (Ambetter)
- QualChoice/QCA Health Plan (both owned by QualChoice Holdings – QualChoice offers POS plans; QHC Health Plan offers PPO plans)
- UnitedHealthcare of Arkansas
UnitedHealthcare of Arkansas is new to the exchange for 2016. They will only be offering policies in central Arkansas in 2016, but plan to expand into other areas of the state in 2017. The other three exchange carriers will all offer plans state-wide in 2016.
Average rate increase less than 5 percent
Average rate increases are relatively small in the Arkansas exchange for 2016. The Arkansas Insurance Department released approved rate changes in late August. For the three carriers that were already offering plans in the Arkansas exchange, the average rate changes are:
- Arkansas BCBS = 7.15 percent increase
- Celtic (Ambetter) = 0.08 percent increase
- QualChoice/QCA Health Plan = 8.2 percent decrease
Arkansas BCBS has the bulk of the current enrollees, with 79 percent of the state’s current individual market share. But almost 9 percent of Arkansas’s individual market enrollees have a plan through one of the QualChoice Holdings carriers, and those policies will see rates decrease more than 8 percent next year.
The modest rate increase for 2016 comes on the heels of a decrease last year; the Arkansas Insurance Department announced in October 2014 that premiums in 2015 would be two percent lower on average compared to 2014 rates.
In addition to the four exchange carriers, Coventry Health and Life only offers plans outside the exchange. And while state regulators approved a 10.5 percent rate increase for Coventry, they have only 16 enrolled members. UnitedHealthcare has 521 current enrollees in their off-exchange plans in Arkansas, and their average rates will increase by 19.7 percent in 2016. In 2016, UnitedHealthcare will offer both on and off-exchange plans in Arkansas.
60% drop in uninsured rate
According to Gallup data, the uninsured rate in Arkansas in 2013 was 22.5 percent. By the first half of 2015, it had fallen to 9.1 percent – a 60 percent drop. The 13.4 percentage point drop is the largest of any state in the country. The state’s acceptance of federal funds to expand Medicaid (using private coverage under a waiver) is credited with much of the state’s success in reducing its uninsured rate, as 250,000 people have gained coverage under the Arkansas Medicaid expansion program since January 2014.
But there’s currently a hitch in the program. Almost 50,000 Medicaid enrollees have been caught up in an eligibility determination process that has resulted in many of them losing their coverage and being unable to access prescriptions or healthcare while the details are sorted out.
The problem stems from an automatic eligibility verification program that the state is using to ascertain whether people are still eligible for Medicaid coverage. If wage information received from the state indicates that an enrollee’s income has increased above the Medicaid eligibility threshold, the Medicaid program sends the enrollee a request for more information. That data must be submitted within ten days, or coverage is terminated. This has resulted in considerable confusion on the part of enrollees and backlog on the part of the Medicaid program.
2015 enrollment data
65,684 Arkansas residents signed up for health insurance on HealthCare.gov between Nov. 15 and Feb. 22 according to the U.S. Department of Health and Human Services (HHS). 44 percent were new to the exchange for 2015, and 88 percent qualified for premium subsidies.
Effectuated enrollment in private plans through the Arkansas exchange stood at 51,436 as of June 30. Attrition is to be expected outside of open enrollment, and Healthcare.gov also increased its enforcement of documentation requirements for immigration and financial status, resulting in the cancellation of some plans and/or premium subsidies. In addition, some enrollees never paid their initial premiums, and others opted to cancel their coverage mid-year.
2015 open enrollment for 2015 had ended. There are some other conditions under which people can apply for health insurance coverage before the next open enrollment period, but they must have a qualifying event in order to purchase coverage outside of open enrollment, on or off the exchange. Enrollment is open year-round for Native Americans and for people who qualify for Medicaid.
Otherwise, the next open enrollment period begins November 1, for coverage that will take effect on January 1, 2016.
Arkansas carves own path on ACA
Arkansas has not followed the pack in its approach to implementing the Affordable Care Act, and it has continued that trend with its path towards the possibility of a state-run exchange (Idaho is thus far the only state that has transitioned from Healthcare.gov to a state-run exchange), although progress towards a state-run exchange is on hold as of September 2015.
States that relied on the federal marketplace for some or all functions outnumbered states that ran their own exchanges in 2014. For 2015, only Idaho moved to a state-run exchange, while Oregon and Nevada increased their reliance on the federal marketplace.
Arkansas’ efforts to transition to a state-run marketplace is not its only atypical move. Arkansas was one of just a few states that implemented a state-federal partnership for 2014. The state also pioneered the Private Option for Medicaid expansion under a Section 1115 waiver from CMS. However, the current Medicaid expansion program is only slated to run through the end of 2016, and the state must either renew it or replace it in order to continue Medicaid expansion into 2017 and beyond.
The future of Medicaid expansion
In August, Governor Hutchinson expressed his support for continuing to accept federal funding to expand Medicaid in Arkansas, but noted that he wants to make sure that the state can continue to create its own version of expanded Medicaid, with several aspects that will require new or renewed waivers from CMS.
Under the current Medicaid expansion in Arkansas, eligible enrollees with household income up to 138 percent of the poverty level are enrolled in private health insurance plans through the exchange, but with the premiums fully subsidized by Medicaid funds. Hutchinson wants to replace that with a program that requires premium payments of up to two percent of household income for people whose household income is between 100 percent and 138 percent of the poverty level (Indiana is an example of another state that has implemented Medicaid expansion with a similar provision).
There are several other contingencies that Hutchinson wants to include if the state continues its Medicaid expansion program, most of which would require waivers from CMS. But Hutchinson noted that whatever they do, it’s not acceptable to simply terminate the expansion of Medicaid and leave 220,000 low-income Arkansas residents with no health insurance coverage. In September 2015, Hutchinson noted that he had communicated with HHS Secretary Burwell regarding Arkansas’ Section 1115 Medicaid waiver, and that she is “cautious” about the proposed reforms, but “indicated that she is happy to work with [Arkansas] on each of these [proposed reforms].”
Lawmakers will consider the extension of Medicaid expansion during the 2016 legislative session.
Arkansas Health Connector enrollment in 2014
Signups for qualified health plans (QHPs) in Arkansas totaled 43,446 during 2014 open enrollment. Among Arkansas residents selecting a QHP, 90 percent qualified for financial assistance, compared to 85 percent nationally. An HHS report released in June showed the average monthly premium, after tax credits, for Arkansas consumers was $94. Thirty-five percent of enrollees who received subsidies in 2014 saw their premiums reduced to $50 or less per month.
Nineteen percent of Arkansas residents selected a bronze plan (20 percent nationally), 67 percent selected a silver plan (65 percent nationally), 13 percent selected a gold plan (9 percent nationally), 0 percent selected a platinum plan (5 percent nationally) and 1 percent selected a catastrophic plan (2 percent nationally). Twenty-five percent of Arkansas enrollees were between the ages of 18 and 34.
Arkansas’ historical approach to the marketplace
The Arkansas legislature considered a bill to establish a state-run exchange during the 2011 session, but it did not pass. The Arkansas Insurance Department then shifted gears and received grant money in February 2012 to develop a partnership exchange.
The state exchange website is called Arkansas Health Connector, and it provides key dates for enrolling, frequently asked questions and other information to help people understand their options for purchasing health insurance. State residents use the federal marketplace, HealthCare.gov, to compare plans, see if they qualify for subsidies, and purchase coverage.
Arkansas was the first state to receive federal approval to expand Medicaid through the Private Option. Through the Private Option, the state uses money earmarked through the ACA for Medicaid expansion to subsidize the purchase of private insurance. The approach has been adopted or considered by a number of other states.
In December 2014, Arkansas received federal approval for two further changes to its version of Medicaid expansion. The waiver allows a requirement of monthly contributions to health savings accounts and limits transportation for routine doctor visits and other non-emergency services.
As originally constructed, the Private Option required annual reauthorization by the Arkansas legislature. In late February 2014, the Arkansas Senate approved continued funding for the Private Option. However, it took the House five votes to reauthorize funding in early March. Arkansas appropriation bills must receive a 75 percent majority in both houses to pass, and the Private Option just squeaked by with votes of 27-8 in the Senate and 76-24 in House.
Legislative support for the Private Option was weakened by the 2014 elections. Republicans, many of whom campaigned against the Private Option, now hold 24-11 and 64-36 majorities in the state Senate and House, respectively.
Gov. Asa Hutchinson asked state legislators to fund the program in its current form through the end of 2016. Legislators heeded Hutchinson’s request by passing Act 46. The law continues Private Option funding through 2016 and establishes a task force to suggest changes to the program for 2017. However, some opponents believe they have killed the Private Option, viewing Act 46 as just a “stay of execution.”
Arkansas legislators are also considering SB 312, which would direct the state Department of Human Services to request federal approval to freeze enrollment in the Private Option effective Dec. 31, 2015. Through January 2015, about 233,500 Arkansas residents were enrolled in the Private Option.
Arkansas health insurance exchange links
Arkansas Health Connector
Arkansas Health Insurance Marketplace Board
Website for nonprofit overseeing Arkansas’ transition to a state-run marketplace