Health insurance patchwork in Arkansas at risk of unraveling

by Craig Wilson ([email protected]) 1,261 views 

Enrollment in the state’s health insurance marketplace is at an all-time high. As of Jan. 4, more than 160,000 Arkansans had selected an insurance plan during the open enrollment period, according to a report from the federal Centers for Medicare and Medicaid Services.

To put it in perspective, this means that more than 6% of the state’s roughly 2.5 million people under 65 now obtain health insurance coverage through the marketplace. That’s about twice the number of people who get their coverage through the state and public school employee plan.

Such high enrollment in the marketplace hasn’t always been the case. In its early years after launching in 2014, the health insurance marketplace averaged annual enrollment between 50,000 and 70,000. At that time, public opinion of the Affordable Care Act, which established marketplaces in each state, was largely unfavorable. That has since changed, with most recent polling showing three in five Americans have a favorable opinion of the law.

Because of its expansiveness, it’s hard to pinpoint what has shifted public opinion of the Affordable Care Act, which was enacted almost 15 years ago. What is clear is that more people are aware of the availability of insurance coverage through the marketplace and are leveraging the financial assistance offered to help them purchase a plan and access healthcare services.

Craig Wilson

What’s changed? First, enhanced premium subsidies for individuals to purchase coverage through the marketplace have been available since 2021. For families whose household incomes put them just above the income limit for Medicaid eligibility (currently about $43,000 annually for a family of four), the availability of enhanced subsidies means that many can get a marketplace plan for $0, and that plan comes with considerable financial protection from deductibles and copays to access healthcare services.

Second, enrollees in Arkansas’ Medicaid expansion program — which uses qualified health plans offered through the marketplace — found genuine value in their coverage during the pandemic. As a result, when many were disenrolled from Medicaid at the end of the public health emergency for various reasons including income changes, the demand for affordable insurance coverage through the marketplace was more acute.

Finally — but not exhaustively — a 2024 federal rule reduced the terms of short-term limited duration health plans to three months. These plans, which have fewer benefits and consumer protections than marketplace plans and are intended to fill gaps in coverage, had previously been available for up to 36 months. This likely resulted in enrollees migrating to the marketplace for coverage options with more long-term protection after their short-term plans expired.

Despite considerable gains in marketplace enrollment in Arkansas, the state still has an opportunity to further reduce its uninsured rate, which was almost 13% among adults in 2023. The opportunity? About 14% of Arkansans who could get financial assistance to purchase coverage through the marketplace are not enrolled.

Unfortunately, time is running short on this opportunity, and gains in enrollment could be at risk. The enhanced financial assistance that has been available since 2021 will expire at the end of this year, unless Congress acts to extend it. If it expires, I expect a return to marketplace enrollment that is at or just above average enrollment prior to the pandemic, particularly if the terms of short-term limited duration plans return to 36 months again.

Allowing enhanced financial assistance to expire has more far-reaching implications in Arkansas than less affordable coverage and a decline in marketplace enrollment. Currently, most women whose pregnancy coverage through Medicaid terminates 60 days into the postpartum period and who aren’t otherwise income-eligible for Medicaid can transition to a marketplace plan for $0. Even with the enhanced financial assistance eliminating the cost for those women, that transition frequently is not happening. If the cost barrier returns, that transition is even less likely to happen.

Allowing enhanced financial assistance to expire could also increase costs of the state’s Medicaid expansion program, called Arkansas Health and Opportunity for Me, or ARHOME, because the program uses qualified health plans purchased through the marketplace. That’s because the health risk of enrollees — reflected in the cost of insurance premiums — is shared, no matter whether enrollees purchase on their own or are enrolled through Medicaid. The marketplace is all one risk pool.

As insurance coverage becomes more costly, the more likely it will be that younger, healthier people will drop coverage, leaving the risk pool with an older, sicker population on average. This is a basic rule of insurance, and it drives up insurance premium costs for everyone left in the pool. In this case, those increased costs will be shared by the Medicaid program.

The growth of the health insurance marketplace has resulted not only in its being a critical source of coverage for Arkansans but a strong thread in the fabric of our insurance market. In doing so, we have protected families from the No. 1 cause of personal bankruptcy — medical debt. We must ensure that our federal policymakers understand that tugging on that thread too hard threatens to unravel Arkansas families’ budgets and economic mobility as well as the state’s patchwork method of delivering care for its residents.

Editor’s note: Craig Wilson, J.D., M.P.A., is the interim president and CEO for the Arkansas Center for Health Improvement, an independent, nonpartisan health policy center in Little Rock. The opinions expressed are those of the author.