State Health Insurance Exchange ‘Quashed’

In a press release sent this morning, State Insurance Commissioner Jay Bradford said that planning efforts for “an Arkansas-run Health Benefits Exchange have ended.”

Bradford declared that legislative opposition to developing an Arkansas exchange “has quashed the state’s efforts to meet federal requirements for implementation of its own exchange by the January 1, 2014, deadline.”

“This opposition, coupled with a lack of state authority, means that Arkansans will be served by the Federal Health Benefits Exchange with enrollment beginning October 1, 2013,” Bradford said.

GOP lawmakers have adamantly opposed the Insurance Department moving forward on the health insurance exchange program, citing uncertainty with the federal health care reform law. The U.S. Supreme Court is expected to consider the constitutionality of the new health care legislation in 2012.

The Insurance Department received a $1 million federal grant to conduct planning for a state-run health insurance exchange, but in the last legislative session, Republican legislators were able to persuade Democratic supporters of a bill enacting it (HB 2138) to move the bill to interim study.

Bradford and the insurance agency continued to discuss the concept in legislative committee hearings and public forums, but were met with strong opposition.

Today, Bradford said that the Health Benefits Exchange Planning Steering Committee, a volunteer advisory group he appointed in April of this year to address policy recommendations for an Arkansas exchange, recommended that it and six associated work groups addressing state exchange planning disband.

“The Steering Committee and I believe insurance is local and local regulation is preferable,” said Bradford.  “This committee and the work groups have been a committed and wise group of individuals that are clearly driven by what is best for Arkansans,” he added. “Although disappointed with this outcome, I have accepted the committee’s recommendation.”

Bradford warned that accepting a federal exchange could have unintended costs to Arkansas.

“Arkansas could lose tens of millions of dollars in premium taxes used for state general revenue funding. It has not yet been determined where those premium-tax dollars will go under a federal exchange,” Bradford’s press release said.

“Additionally, the Arkansas Medicaid program must connect with the federal exchange.  Had the state elected to run its own Health Benefits Exchange, 100% of development costs would have been paid for by the federal government,” he said.

Bradford also encountered new resistance to another component of federal health care reform at a hearing on Thursday (Dec. 1). Bradford sought permission to spend a $3.8 million federal grant aimed at implementing more stringent oversight of health insurance rate increases.

Republican lawmakers quizzed Bradford on the effort and questioned the need to move forward on the initiative. The Arkansas Legislative Council is expected to study the grant request again at its Dec. 16 monthly meeting.