Highlights and updates
- Overall average rates, and average benchmark rates, increase by about 4% for 2019
- Now a state-based exchange using HealthCare.gov for enrollments, but exchange fee is controversial
- 61,702 effectuated enrollees as of early 2018
- All insurers remained in the exchange for 2018
- Approved rates for 2018 had the cost of CSR added to silver premiums
- Overall rate increase would have been single-digit if CSR funding had continued
- Navigator funding reduced when CMS approval of lower Medicaid eligibility cap was delayed (and later rejected)
Arkansas exchange overview
Arkansas has mostly embraced the ACA, expanding Medicaid via an 1115 waiver, operating a fully state-based small business exchange, and as of 2017, running a state-based exchange for individuals using the HealthCare.gov enrollment platform.
For the first three years of exchange implementation, Arkansas had a partnership exchange for individuals, but as of 2017 (starting with open enrollment that ran from November 1, 2016 to January 31, 2017), they have a state-based exchange using the federal enrollment platform at HealthCare.gov. The state has run its own exchange for small businesses since November 2015.
For individuals enrolling in coverage through the Arkansas exchange, the interface remains the same, since they are still using HealthCare.gov’s enrollment platform. But behind the scenes, My Arkansas Insurance (the state-based exchange) is playing a larger role now, and consumers can use that website to obtain information and assistance. The Arkansas exchange call center is operational Monday to Saturday, 8 a.m. to 4:30 p.m, Monday to Friday.
The Arkansas exchange board approved an $80,000 “Phase 1” budget for marketing in 2018, as states with their own exchanges don’t have to rely on federal funding for HealthCare.gov marketing (which has been significantly reduced under the Trump Administration). The marketing and outreach committee has recommended a $350,000 budget for an enrollment assistance program that will focus on agent/broker referrals, navigators, and a centralized hotline where it can all be coordinated.
The Arkansas exchange board finance committee voted in January 2018 to reduce Navigator funding by 67 percent for 2018. The Arkansas Democrat-Gazette reported in February that at the full board had also voted to approve the funding cut for Navigators, through September 2018.
The Navigator funding cut was made because of a delay in the federal approval process for the state’s Medicaid waiver amendment proposal (described below). The state had submitted a waiver amendment in mid-2017, requesting—among other things—that Medicaid eligibility be reduced from 138 percent of the poverty level to 100 percent of the poverty level.
Ultimately, HHS rejected that portion of the waiver proposal, although a Medicaid work requirement was approved. If the lower cap on Medicaid eligibility had been approved, it was estimated that 60,000 people would have lost their Medicaid coverage and would have had to transition to private plans in the exchange (Arkansas already purchases private plans in the exchange for people who are eligible for expanded Medicaid, but if the eligibility limit had been reduced, those individuals would have had to buy their own coverage in the exchange, with premium subsidies from the federal government). In anticipation of the influx of people who would need to shop for private coverage in the exchange, the state had been paying 11 Navigators who would be able to help people enroll.
But the state had anticipated that the reduced eligibility guidelines would take effect in January 2018. By mid-February, they were still waiting for federal approval. So the exchange board voted to approve a funding cut through September 2018, to reduce the number of Navigators from 11 down to three or four, since the influx of people needing to transition from Medicaid to private health insurance had been delayed. And since the federal government notified Arkansas in March that the transition to a lower Medicaid eligibility cap had not been approved, there was no need to ramp up the Navigator support, as the influx of new enrollees didn’t happen.
The Arkansas Health Insurance Marketplace board of directors meeting minutes are available here.
Average 2019 rate increase just over 4%, and average benchmark rate also increasing by 4%
The Arkansas exchange has four insurers offering plans in 2018, and all four are continuing to offer coverage for 2019. Rate increases for 2019 are significantly smaller than the double-digit rate hikes that applied for 2018, which mirrors the general nationwide trend of much more stable rates heading into 2019. The Arkansas Insurance Department approved the following average rate increases for 2019:
- Arkansas Blue Cross Blue Shield (USAble Mutual): 4.4 percent increase
- Centene/Ambetter (formerly Celtic): 4.6 percent increase
- QualChoice: 1.06 percent increase
- QCA Health Plan: 1.59 percent increase
Arkansas Blue Cross Blue Shield has the bulk of the market share, with 186,510 enrollees. Ambetter has the second largest chunk of the market, with 85,373 enrollees. QCA and Qual Choice each have fewer than 20,000 enrollees. The weighted average rate increase for 2019 is just over 4 percent, although it would likely be decreasing slightly if the individual mandate penalty wasn’t being eliminated, and if the Trump Administration hadn’t taken steps to expand access to short-term and association health plans.
Although benchmark premium changes are sometimes very different from overall average premium changes, that’s not the case in Arkansas for 2019. The average benchmark premium is increasing by 4 percent in Arkansas. Premium subsidies are based on the benchmark premium, so they will also increase slightly in 2019, to offset the higher benchmark premiums.
Rate filings for Arkansas insurers had to be submitted by July 23, 2018. Insurers were instructed to add the cost of cost-sharing reductions (CSR) to on-exchange (on-marketplace) silver plan rates: “any premium amounts due to lack of federal Cost Sharing Reduction funding should be attributed to the silver level variants for Marketplace filings.” However, Ambetter’s rate filing and Arkansas Blue Cross Blue Shield’s rate filing indicate that they’re continuing to add the cost of CSR to on- and off-exchang silver plans, just as they did in 2018.
Confining the cost of CSR to only marketplace plan rates is the most beneficial approach for consumers. It results in larger premium subsidies for everyone who qualifies for premium subsidies, since the subsidies are based on the cost of silver plans (specifically, the second-lowest-cost silver plan in each area). People who want a silver plan are protected from the added cost of CSR either by shopping on-exchange if they qualify for a premium subsidy (since the subsidy will grow to compensate for the added cost of CSR) or off-exchange if they don’t qualify for premium subsidies (since the off-exchange silver plans won’t have the cost of CSR added to their premiums). If the cost of CSR is spread across all silver plans, including off-exchange plans (which appears to be the case for at least the two largest insurers in the state), people who aren’t eligible for premium subsidies may find that a non-silver plan (on- or off-exchange) is a better value than a silver plan.
Arkansas transitioned to an SBM-FP for 2017
Arkansas already had a state-run SHOP exchange for small businesses, which debuted in November 2015.
The state has also been working for years towards establishing a state-run exchange for individuals (details below), but put the brakes on that process in the fall of 2015. By June 2016, however, the state had requested approval (which was granted) from HHS to operate a state-based exchange that uses the federal enrollment platform on Healthcare.gov, starting November 1, 2016. This setup is called a federally-supported state-based exchange, or state-based marketplace with federal platform (SBM-FP).
Through 2016, SBM-FPs used Healthcare.gov for free. But the fee increased 1.5 percent of premiums for 2017, and to 2 percent of premiums in 2018. And the federal government will increase the fee for using HealthCare.gov to 3 percent in 2019. The fee in states that rely fully on the federally-run exchange is 3.5 percent, so states like Arkansas that otherwise run their own exchanges are only getting a small discount. As a result, Nevada is planning to switch to operating their own exchange platform in 2020, and Oregon is also considering it.
Controversy over marketplace fee includes discussion over whether Insurance Department should run the exchange
Starting in December 2016, the Arkansas Health Insurance Marketplace began collecting 3 percent of premiums as its exchange fee, replacing the previous 3.5 percent fee that Healthcare.gov charged before the state-run exchange was up and running. In 2017, half of the new fee was remitted to Healthcare.gov for use of its enrollment platform, and the other half was used by the Arkansas exchange to cover their operations costs. The fee is essential to the exchange, as they can no longer use federal grant money to cover operational expenses after the end of 2016.
But there was significant controversy over the legality of the fee, and whether it could be implemented without the consent of the full legislature. Arkansas Online’s Andy Davis has a thorough account of the issues surrounding the exchange fee in articles dated September 7, September 8, and September 9, 2016.
Soon thereafter, the Arkansas Health Insurance Marketplace board of directors voted unanimously to increase the fee to 3.5 percent starting in 2018, but this was before HHS announced that the exchange user fee for SBM-FPs would be just 2 percent in 2018 (instead of the 3 percent that had been proposed). So the Arkansas exchange ended up keeping the 3 percent fee in place for 2018 as well.
But for 2019, the exchange will have to pay 3 percent for the use of HealthCare.gov, making the current fee is insufficient, as it would have to be fully remitted to the federal government, leaving nothing left for the state to run its exchange operation. So the fee will need to increase, and it’s scheduled to be 4.25 percent of premiums. This is higher than the fee charged in states that simply rely fully on the federally-run exchange (3.5 percent), but Arkansas retains some flexibility and control by having a state-run exchange, and that would be lost if the state simply defaulted to the federally-run exchange.
Not surprisingly, however, the higher fee is controversial. Arkansas Insurance Commissioner, Allen Kerr, has said that the Arkansas Insurance Department could take over the duties the exchange currently performs (while continuing to use HealthCare.gov as the enrollment platform) for under $600,000/year, as opposed to the $3.8 million that the exchange spent in the past fiscal year. Kerr has said that if the Insurance Department were to take over the duties of the exchange, the fee would drop back down to 3 percent as of 2020, which would be entirely remitted to HealthCare.gov by the insurers, and the cost to manage the exchange’s duties would come from the insurance department’s budget, which is currently not fully utilized.
But opponents of this proposed change note that consumers would have less assistance if the exchange board was to be dissolved and the current employees let go. The exchange has said that it’s already reducing the amount that it spends, and has postponed a decision on setting the exchange fee for 2020. So it’s possible that the fee could drop back below 4.25 percent in 2020, even with the current exchange remaining in place.
All of the state-run exchanges have carriers fees/assessments in order to generate funding needed to operate the exchange, but the fees vary considerably from one state to another (in all of the states that rely solely on HealthCare.gov, the fee is 3.5 percent), and the significant variations in enrollment volume make it hard to compare states on an apples-to-apples basis. Nevada also has a state-run exchange that uses HealthCare.gov, but their carrier assessment is only 3.15 percent for 2019 (and they have to pay the same 3 percent to HealthCare.gov that Arkansas has to pay). Average premiums in Nevada’s exchange are virtually identical to the average premiums in the Arkansas exchange ($507/month versus $509/month), but Nevada’s exchange has more enrollees — almost 78,000 versus 62,000 — which means they can generate more total revenue with the same percentage carrier fee.
2018 enrollment: 61,702 with effectuated coverage as of early 2018
Open enrollment for 2018 coverage began on November 1, 2017, and ended December 15, 2017. During open enrollment, 68,100 people enrolled in private plans through the Arkansas exchange. That was about a 3 percent decrease from 2017, when 70,404 people enrolled, and a 7.5 percent decrease from the peak enrollment in 2016, when 73,648 people signed up through the Arkansas exchange.
This was in keeping with the general trend across states that use HealthCare.gov: enrollment generally peaked in 2016, and declined in each of the two following years. There are a variety of reasons for this, including reduced federal funding for outreach and marketing, fewer available enrollment assisters, a shorter enrollment window (for 2018), and general public confusion about the status of the ACA, especially the individual mandate. To clarify, the mandate remains in effect in 2018, but will be repealed as of 2019 as a result of the GOP tax bill that was enacted in late 2017.
Effectuated enrollment for 2018 stood at 61,702 as of early 2018. Effectuated enrollment is always lower than the total number of people who initially enroll, because some people don’t pay their first premium.
All insurers remained in the exchange for 2018, were allowed to submit two sets of 2018 rates
Rate filings were due in Arkansas by July 14, 2017, but form filings were due May 15. All of the insurers that offered 2017 exchange plans in Arkansas also filed plans for 2018: Arkansas Blue Cross Blue Shield, QualChoice, QCA Health Plan, and Centene/Ambetter (QualChoice and QCA are both owned by Qual Choice Holdings).
On May 23, the Arkansas Insurance Department issued a bulletin stating that insurers could submit alternate rate filings to the Insurance Department, which would take the place of their officially filed rates if there were changes at the federal level relating to cost-sharing reduction (CSR) funding and/or requirements. California’s Insurance Commissioner granted similar flexibility for insurers filing 2018 rates.
Ultimately, Arkansas regulators ended up finalizing the rates that were based on the assumption that CSR funding would not continue in 2018. In hindsight, this was a wise decision, as the Trump Administration cut off CSR funding the following week.
2018 rate increases more than double what they would have been if CSR funding had been allocated
The Arkansas Insurance Department has a web page where they show the initial rate increases that insurers proposed, as well as the rates that were proposed to cover the cost of cost-sharing reductions (CSR). The state had noted that if CSR funding was not committed by the federal government by October 6, they would finalize the higher rates. Not only did October 6 come and go without a CSR funding commitment, but the Trump Administration officially eliminated CSR funding the following week, on October 12. But since Arkansas had already finalized rates that are high enough to cover the cost of CSR, the market remains stable heading into 2018.
The cost of CSR has been applied to the premiums for silver plans. That means silver plan rates are increasing by more than the premiums for other metal levels, which means that premium subsidies are also larger than they would otherwise have been for 2018. Enrollees can use the premium subsidies to purchase plans at any metal level, which might make bronze and gold plans a better value in 2018 for some enrollees (enrollees who are eligible for CSR benefits — ie, those whose income doesn’t exceed 250 percent of the poverty level — need to choose silver plans if they want to take advantage of the CSR benefits).
The revised rates that the insurers proposed were finalized and implemented for 2018, and are obviously quite a bit higher than they would have been if CSR funding had been allocated by Congress:
- Arkansas Blue Cross Blue Shield (USAble Mutual): initially proposed a 7.8 percent average rate increase, revised to 14.2 percent.
- Centene/Ambetter (formerly Celtic): initially proposed a 9.9 percent increase, revised to 21.4 percent.
- QualChoice: initially proposed 21.94 percent increase, later reduced to 8.78 percent (assuming CSR funding was committed), but then revised to 24.78 percent.
- QCA Health Plan: initially proposed 22.1 percent increase, later reduced to 8.94 percent (assuming CSR funding continued), but then revised to 22.47 percent.
70,404 people enrolled in qualified health plans through the Arkansas exchange during the 2017 open enrollment period. That’s lower than the 73,648 people who enrolled during the 2016 open enrollment period. Nationwide, there was an overall reduction in enrollment across states that use HealthCare.gov, due in part to increasing premiums, uncertainty over the future of the ACA, and the Trump Administration’s decision to scale back advertising and outreach for HealthCare.gov in the final week of open enrollment. in addition to 258,000 low-income residents who were enrolled in
Nationwide, there was an overall reduction in enrollment across states that use HealthCare.gov, due in part to increasing premiums, uncertainty over the future of the ACA, and the Trump Administration’s decision to scale back advertising and outreach for HealthCare.gov in the final week of open enrollment. in addition to 258,000 low-income residents who were enrolled in
As of January 1, there were 310,951 people enrolled in Arkansas’ “private option” Medicaid expansion program (Arkansas Works), which uses Medicaid funds to purchase private plans through the exchange. That was down from 331,000 enrollees at the end of 2016, due to an effort by the state to remove people no longer eligible for Medicaid from the program (more than 21,000 people were removed from the Medicaid rolls as of January 1, 2017), but enrollment was back up to over 320,000 by March 31, 2017. However, it was down to 285,000 by January 2018.
In March 2017, the Arkansas legislature approved continued funding for Medicaid expansion by passing S.B.196, which was signed into law by Governor Asa Hutchinson in early April.
But with the Trump Administration in office, Hutchinson sought approval for Medicaid expansion provisions that were a non-starter under the Obama Administration. His plan was to cap Medicaid expansion at the poverty level, instead of 138 percent of the poverty level (people with income above the poverty level could obtain subsidies in the exchange if they weren’t eligible for Medicaid). He also wanted to implement a work requirement. State lawmakers approved both changes via bills (S.B.3 and H.B.1003) that passed in May 2017; Hutchinson signed them into law the next day.
The state submitted an 1115 waiver to CMS in the summer of 2017, hoping to implement the changes in January 2018. But the waiver wasn’t approved until March 2018, and CMS rejected the proposal to lower the Medicaid eligibility cap to 100 percent of the poverty level (CMS has never approved such a measure, under the Obama or Trump Administrations; Wisconsin caps Medicaid eligibility at the poverty level instead of 138 percent of the poverty level, but they don’t qualify for federal Medicaid expansion funding). But CMS did approve the work requirement, and Arkansas Works will be able to implement it as of June 2018. Arkansas Works’ work requirement is officially known as a “community engagement” program, as it can be fulfilled by a variety of activites, including school, work, community service, job training, or volunteering.
Few enrollees impacted by carrier exits at the end of 2016
UnitedHealthcare is not offering plans in the Arkansas exchange for 2017 (details below). But unlike some other states where the impact of carrier exits has been significant, Arkansas officials have said that only about 550 people in the Arkansas exchange had to switch to another carrier for 2017.
For 2017 — in a change from previous years — HHS implemented a protocol for mapping exchange enrollees to a different carrier if their existing carrier left the exchange and the enrollee didn’t actively pick a new plan for the coming year.
HHS gave states the option of determining how that process would be implemented, or doing it on behalf of the state; Arkansas chose to sort out the plan “crosswalks” at a state level, and worked to get those 550 people mapped to new plans for 2017.
Those enrollees also had the option of logging back into the exchange during open enrollment and making their own selection, overriding any mapping that was done by the exchange. If the enrollees made their plan selection by December 19 (an extension from the original deadline of December 15), their new plan was in place January 1. Open enrollment continued until the end of January, but plan selections made after December 19 had coverage effective in February or March
2017 rates and carriers
In May 2016, when carriers in Arkansas had submitted their rate proposals for 2017, state regulators said that they didn’t believe there was enough justification for those rate requests, and that they planned to deny them “until there is sufficient justification to properly consider any rate increase.”
In mid-August, all of the carriers that offer plans in the Arkansas exchange proposed new rate increases for 2017, all of which were lower than their initially filed rates. Rate increases were then reduced even further for QualChoice and QCA:
- Arkansas Blue Cross Blue Shield (USAble Mutual): initially proposed a 14.7 percent increase, later reduced to 9.7 percent (the carrier strongly disagreed with state regulators’ decision to disapprove the 14.7 percent rate increase and require the carrier to refile at 9.7 percent, but went along with the request in order to prevent a market exit).
- Centene/Ambetter (formerly Celtic): initially proposed an 8.52 percent increase, later reduced to 4 percent
- QualChoice: initially proposed a 23.68 percent increase, later reduced to 13.5 percent, and then further reduced to 11.1 percent.
- QCA Health Plan: initially proposed a 23.8 percent increase, later reduced to 13.6 percent, and then further reduced to 11.3 percent.
QualChoice and QCA are both owned by QualChoice Holdings – QualChoice offers POS plans; QHC Health Plan offers PPO plans). The Arkansas Insurance Department recommended that the carrier’s lowest-filed rates (ie, the third round of rate filings, Submitted in September) be approved.
United Healthcare not offering plans in 2017
The Arkansas Insurance Department confirmed that United would not participate in the Arkansas exchange in 2017. The carrier pulled out of the state’s individual market at the end of 2016, which was the case in most of the states where United offered exchange plans in 2016.
UnitedHealthcare made headlines in November 2015 when they announced that they were considering pulling out of the exchanges at the end of 2016. Even prior to the launch of the ACA’s exchanges, UnitedHealthcare only had about 9 percent of the individual market share in Arkansas, trailing Arkansas Blue Cross Blue Shield’s 78 percent market share by a wide margin.
United did not participate in the Arkansas exchange in 2014 or 2015, and their off-exchange enrollment in the state was just 521 people in 2015. They joined the Arkansas exchange for 2016, although they only offer plans in central Arkansas, and their market share is still quite small.
Arkansas uses a “private option” approach to Medicaid expansion, whereby Medicaid-eligible consumers are enrolled in private plans through the exchange, funded by Medicaid. As of the end of January 2016, there were 704 private option enrollees with coverage through UnitedHealthcare. By October, the state reported that only 550 people were enrolled in UnitedHealthcare plans through the exchange, including Medicaid expansion enrollees.
73,648 people enrolled in private plans through the Arkansas exchange during the 2016 open enrollment period that ended on January 31. For perspective, the Arkansas exchange had more than 51,000 in-force enrollees as of mid-2015. Most of them are among the enrollees for 2016 (their plans were either auto-renewed, or they returned to the exchange and shopped for a different plan for the new year), but about 27,250 enrollees are new to the Arkansas exchange for 2016.
During the 2015 open enrollment period, enrollment in private plans through the Arkansas exchange totaled 65,684 people, but by the end of March 2015, in-force enrollment had dropped to 52,784. In 2016, enrollment as of August stood at 61,189.
Average benchmark premiums in the Arkansas exchange are just 4.3 percent higher than they were in 2015, which means subsidies are slightly higher too. Overall, rates increased by an average of less than 5 percent in Arkansas, but there’s significant variation from one plan to another; some increased in price while others decreased. 88 percent of the people who enrolled for 2016 are receiving premium subsidies, which is unchanged from 2015.
State-run small business exchange
On November 1, 2015, Arkansas launched My Arkansas Insurance, the new state-run small business (SHOP) exchange. Coverage is available through the exchange for businesses with 2 to 50 employees, and enrollment through the site has been smooth. The state-run SHOP exchange became available on the same day that open enrollment began in the individual market. But open enrollment for small businesses continues year-round in every state.
Prior to the debut of the state-run SHOP exchange, Arkansas was using the federally-run SHOP exchange on Healthcare.gov. Arkansas had about 200 small business employees who had coverage under the federally-run SHOP exchange, and they were transferred to the state-run exchange.
Arkansas joined Utah, Mississippi, and New Mexico in opting to run their own SHOP exchange while using Healthcare.gov for individual enrollments.
For 2016 and again in 2017, Arkansas Blue Cross Blue Shield is the only carrier offering plans through the Arkansas SHOP exchange.
The long journey to a state-run exchange for individuals
The Arkansas Health Insurance Marketplace was established in 2013 by the Arkansas legislature, under Act 1500, to create a state-based exchange. But the process was then put on hold for a while.
In March 2015, lawmakers had 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 was 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.
In June 2015, 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.
In June 2015, 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 August 2015, he reiterated his concerns, 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?”
In September 2015, 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 had communicated that information to HHS. Hutchinson went on to say that Healthcare.gov was working well, and that he wasn’t sure the state needed to push forward with plans for a state-run exchange, which involves additional risks and costs (the King verdict was reached in June 2015, so that was no longer an issue).
By June 2016, Hutchinson’s focus has turned to operating a state-based exchange but using the federal enrollment platform at Healthcare.gov, and that took effect in November 2016. Individuals can get assistance and information at My Arkansas Insurance, and are then directed to HealthCare.gov to enroll.
Reform still a priority
In December 2015, Hutchinson replaced two members (including the Chairman) of the 11-member Arkansas Health Insurance Marketplace Board of Directors with his own appointees. A spokesman for Hutchinson said that the two new members “share Hutchinson’s vision of the board’s direction.” The two out-going board members had both been appointed in 2013 by former Governor Mike Beebe.
The state was also considering a 1332 innovation waiver to maximize flexibility in implementing the ACA in Arkansas, but the future of the ACA under a Trump Administration is likely to be significantly different than it would otherwise have been, making 1332 waivers less likely to be submitted and/or approved.
In February 2016, Hutchinson announced that he had hired Cindy Gillespie, one of Mitt Romney’s former healthcare advisers, to lead the Arkansas Department of Human Services. One of Gillespie’s responsibilities is overseeing the “private option” Medicaid expansion program that Arkansas has been using (Medicaid funds pay for private health plans in the exchange for eligible enrollees), and working with Hutchinson and HHS to reform the current Medicaid expansion model.
In April 2016, Hutchinson called a special session of the legislature to consider his Arkansas Works proposal to extend and reform the state’s existing Medicaid expansion program. Lawmakers approved his proposal, along with funding, in April. In December 2016, CMS approved the state’s waiver proposal for Arkansas Works, and the program will take effect in 2017, continuing the privatized Medicaid expansion, but with some modifications.
New exchange carrier for 2016 – but only for one year
Five carriers offered individual health plans in the Arkansas exchange for 2016, although two of them were owned by the same parent company:
- Arkansas Blue Cross Blue Shield
- Celtic Insurance Company (Ambetter)
- QualChoice/QCA Health Plan (both owned by QualChoice Holdings)
- UnitedHealthcare of Arkansas
UnitedHealthcare of Arkansas was new to the exchange for 2016, and only offered policies in central Arkansas. They had initially planned to expand to other areas of the state for 2017, but subsequently decided to exit the exchange altogether at the end of 2016.
The other exchange carriers were offering plans state-wide for 2016.
Average rate increase less than 5 percent for 2016
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 were:
- Arkansas BCBS = 7.15 percent increase
- Celtic (Ambetter) = 0.08 percent increase
- QualChoice/QCA Health Plan = 8.2 percent decrease
Arkansas BCBS had the bulk of the 2015 enrollees, with 79 percent of the state’s individual market share. But almost 9 percent of Arkansas’s individual market enrollees had a plan through one of the QualChoice Holdings carriers in 2015, and those policies had rates decrease of more than 8 percent in 2016.
The modest rate increase for 2016 comes on the heels of a decrease the year before; 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 had only 16 enrolled members.
UnitedHealthcare had 521 enrollees in their off-exchange plans in Arkansas in 2015, and their average rates increased by 19.7 percent in 2016. For 2016, UnitedHealthcare is offering both on and off-exchange plans in Arkansas, although they’ll exit the exchange at the end of 2016.
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.
According to a Kaiser Family Foundation analysis, there were still 285,000 uninsured residents in Arkansas in 2015. 44 percent of them were eligible for Medicaid, and 21 percent were eligible for premium subsidies. Navigators, brokers, and enrollment assisters have been reaching out to these people in an effort to get them enrolled.
2015 enrollment data
65,684 Arkansas residents signed up for health insurance on HealthCare.gov between Nov. 15, 2014 and Feb. 22, 2015, 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.
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 late 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; Hawaii also began using Healthcare.gov for enrollments in the fall of 2015.
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.
Medicaid expansion in Arkansas
Through August 2016, about 317,000 Arkansas residents were enrolled in the Private Option expanded Medicaid in Arkansas. The state obtained a waiver from CMS that allows them to implement Medicaid expansion in a unique way, by utilizing Medicaid funds to pay premiums and most cost-sharing for eligible enrollees. You can read more here about how expanded Medicaid works in Arkansas.
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 – Arkansas Health Connector – was a very basic informational website at this point. Individual enrollees had to use HealthCare.gov, to compare plans, see if they qualify for subsidies, and purchase coverage. Small businesses use My Arkansas Insurance.
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, and further weakened with the 2016 election. Republicans, many of whom campaigned against the Private Option, hold 24-11 and 73-27 majorities in the state Senate and House, respectively, as of 2017.
Governor 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 believed they had killed the Private Option, viewing Act 46 as just a “stay of execution.”
In December 2016, CMS approved additional modifications to the Arkansas Medicaid expansion waiver, ushering in Arkansas Works as of 2017, with a five-year waiver. It will continue the state’s private approach to Medicaid expansion (with some changes) for the time being, although the future of Medicaid expansion is somewhat up in the air with the incoming Trump Administration.
Arkansas health insurance exchange links
Arkansas Health Connector
Arkansas Health Insurance Marketplace Board
Website for nonprofit overseeing Arkansas’ transition to a state-run marketplace
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.