Committee passes bill merging AHIM with Arkansas Insurance Department

A bill that would abolish the Arkansas Health Insurance Marketplace and move its responsibilities into the Arkansas Insurance Department advanced through committee Thursday (Jan. 31).

SB 113 advanced on a voice vote through the Senate Insurance and Commerce Committee, with none objecting. Sponsored by Sen. Jason Rapert, R-Conway, it also would abolish AHIM’s board of directors.

AHIM is the state-based entity helping administer the exchange through which individuals purchase insurance under the Affordable Care Act, otherwise known as Obamacare. Currently, 62,731 Arkansans have insurance that they purchased through the exchange. The Legislature created AHIM in 2013. An oversight committee formed that year has recommended that it be merged into AID.

“We have people there that really don’t have that much to do, and it’s time to move forward,” said the oversight committee’s chair, Sen. Ronald Caldwell, R-Wynne.

Rapert said absorbing AHIM’s responsibilities into AID would create greater efficiencies in state government.

“What we found over the past year, virtually everything AHIM does during the rate filing season is a duplication of the work done at AID, and in many cases AID had to train the AHIM staff to perform those functions,” he said.

Ryan James, AID legislative liaison and communications director, told the committee that the merger would reduce the fee insurers pay to support the exchange. In plan year 2019, the fee is 4.25%, with 1.25% going to the state and the rest going to the federal government. In plan year 2020, Arkansas’ share would be reduced to 1%.

James said that amount would not be needed if AHIM is merged into AID.

James said the annual costs of operating a nine-person AHIM team administering $253 million in annual premiums is 28% of AID’s annual appropriation. In contrast, AID employs 155 people who regulate $14.2 billion in premiums across 212 lines of insurance. While AID is appropriated about $13.8 million a year, it spent $11 million last fiscal year, all funded by fees. Its surpluses are added to the state’s general revenues.

Former Rep. Nate Bell, I-Mena, who was hired Jan. 28 on a contractual basis to administer the program, told the committee that those numbers don’t account for AHIM performing marketing and promotion services, while the Insurance Department only regulates.

Bell, who voted against the exchange’s creation as a legislator, said an outside entity like AHIM has flexibility that a state agency does not. Abolishing AHIM would make it harder for the state to operate its own exchange, rather than relying on the federal government as it does now, should it choose to do so. He said moving a marketing entity into a regulatory body creates conflicts of interest. The state’s so-called “sovereign immunity,” which limits its ability to be sued, would remove the potential for legal remedies. The move also would put the state in the position of marketing Obamacare, Bell said.

“I know the numbers, I know what we’re working with, and I can provide you with a far better alternative that keeps your flexibility and is consistent with conservative principles,” he said.

Bell later told reporters he is creating a “major reform plan” that would cut AHIM’s overall costs by 60% and would reduce the fees. That plan will be introduced in the latter part of next week, he said.

Bell said he will be working as a contract employee earning about a $130,000 annual total fee, prorated monthly. The previous director, Angela Lowther, was paid $150,000 as a government employee. He said if SB 113 does not become law, that he will stay in that position long enough to ensure reforms are enacted.