Legislative committee reviews, approves insurance fee increase; law still unclear

It was unclear before Wednesday whether the Arkansas Health Insurance Marketplace board has the authority to levy a 3% fee on insurance plans without legislative approval, and it’s still unclear. But just in case, the approval has been granted.

The approval came Wednesday (Sept. 14) from the Arkansas Health Insurance Marketplace Legislative Oversight Committee after an inconclusive discussion about what the law that created the marketplace says.

The 3% fee will be assessed starting Dec. 1 to all qualified health plans sold in the marketplace during plan year 2017 – the marketplace being the mechanism for approximately 65,000 individuals and employees of small businesses in the state to purchase insurance that was created by the Affordable Care Act, otherwise known as Obamacare.

It is being applied because the state is taking from the federal government some of the responsibilities for administering the exchange for individuals. The state already is administering it for employees of small businesses. Half of the fee will go to the state and the other half to the federal government, which enrolls individual consumers through healthcare.gov. Because of that transfer, it replaces a 3.5% federal fee that was applied to individual plans.

The Marketplace was created by Act 1500 of 2013, which requires the Oversight Committee to review recommendations of the Marketplace board and report to the Senate president pro tempore and the speaker of the House. The Marketplace board recommending assessing insurance companies the fee in a letter to the Oversight Committee in a letter dated Oct. 1, 2015. As reported by the Arkansas Democrat-Gazette, legislative staff had incorrectly recorded the committee had approved a fee increase in its meeting Oct. 22, 2015, when in fact it had not.

At the committee meeting, staff members with the Bureau of Legislative Research were noncommittal over the Marketplace’s authority to administer the fee with or without legislative approval. Sen. Jason Rapert, R-Conway, said he reads the law to mean the Legislature has the ability to approve fee increases. Mike Castleberry, chair of AHIM’s board of directors, told legislators the board would follow the Legislature’s direction. And so, to ensure the fee is being enacted legally, the committee voted to consider the fee reviewed and approved.

Left unresolved is exactly how the fees are to be reviewed, recommended and approved. The committee’s chairman, Sen. David Sanders, R-Little Rock, said clarifying legislation will need to be passed when the Legislature meets in its regular session in January.