Senate advances bill abolishing a state entity created by the Affordable Care Act

A bill that would abolish the Arkansas Health Insurance Marketplace and move its duties to the Arkansas Insurance Department moved one step closer to the governor’s desk Wednesday (Feb. 6).

Senate Bill 113 by Sen. Jason Rapert, R-Conway, passed the House Insurance and Commerce Committee on a voice vote with a few members voting no. It now moves to the full House for consideration after having already passed the Senate. Gov. Asa Hutchinson has said he supports the bill.

AHIM is the state-based entity helping administer the exchange through which individuals purchase private insurance under the Affordable Care Act, otherwise known as Obamacare. Currently, 62,731 Arkansans have insurance that they purchased through the exchange. The bill would complete the transfer of duties by March 15.

The bill arose after an oversight committee studied the issue for a year-and-a-half. It was chaired by Sen. Ronald Caldwell, R-Wynne, and Rep. Deborah Ferguson, D-West Memphis. Rapert, Caldwell and Ferguson told legislators the marketplace, an independent, quasi-state entity, has outlived its usefulness, and its regulatory functions are duplicative of work already done by the Arkansas Insurance Department. They said the Insurance Department could do the same work for much less or possibly for no additional cost at all.

The change 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. If the bill were to fail, in plan year 2020, Arkansas’ share would be reduced to 1%. That amount would not be needed if AHIM is abolished and its duties moved to AID.

Caldwell said the change would reduce Arkansans’ insurance premiums. Rapert said the AHIM had failed to provide adequate information about its administration to the oversight committee. He said a board member had told him that “things are on fire.”

“We’re not in the business of just trying to keep any entity alive so that they can say they’re justified,” Rapert said.

Arkansas Insurance Department Director Allen Kerr said the department collects the information on the insurance policies, reviews the rates and then sends that information to AHIM, which approves it and passes it along to the federal Centers for Medicare and Medicaid Services. That review by AHIM is unnecessary, he said.

“This is not going to be a heavy lift for the Insurance Department. We can handle this pretty well,” he said.

But Nate Bell, AHIM’s recently hired interim director, told legislators that most of AHIM’s expenses are related to marketing insurance polices, which the Insurance Department doesn’t do. He told lawmakers the state should not be in the business of marketing insurance. Bell said he has a plan to reduce AHIM’s expenditures, including reducing salaries and benefits by 24%. But he was not allowed to present its details by the committee’s chairman, Rep. Mark Lowery, R-Maumelle.

AHIM has eight employees who are not state employees and would lose their jobs. Kerr said the department doesn’t have positions available for the employees, though they can apply for open ones. He said he doesn’t expect any of them to work for the department.