The health insurance fee paid by consumers to support the state's health insurance exchange would go down in 2020, but still be higher than it is now, under a recommendation on Thursday by a legislative panel.
The vote by the Legislative Council's Arkansas Health Insurance Marketplace Oversight Subcommittee came after panel members questioned why the fee is set to increase next year to a level above what consumers in many other states pay.
Sen. Jason Rapert, R-Bigelow, noted that the Arkansas Health Insurance Marketplace, which is responsible for the exchange, already collects more through the fee than it spends each year.
"I don't see a reason for us to build a nonprofit agency's reserves on the backs of premiums being paid by consumers," Rapert said.
Angela Lowther, the marketplace's director, said the agency doesn't receive tax dollars and has to collect enough money to remain self-sufficient.
"One thing that we'll never do is come ask you for money," she told lawmakers on the panel.
Created by the Legislature in 2013, the marketplace certifies the insurance plans sold in the state through healthcare.gov, promotes enrollment and pays for a call center with operators that help consumers sign up.
The fee it collects now is equal to 3 percent of the premiums for the plans sold through the website. Insurance companies pay the fee and then pass along the cost to consumers through higher premiums.
Two-thirds of the money collected goes to the federal government to pay expenses associated with the website, and the marketplace keeps the rest.
Next year, the fee is set to increase to 4.25 percent. That includes an increase in the federal fee from 2 percent to 3 percent of the insurance premiums and an increase in the marketplace's portion from 1 percent to 1.25 percent of the premiums.
In September, the marketplace's board proposed keeping the fee at 4.25 percent in 2020.
Under the legislative subcommittee recommendation on Thursday, the fee would instead drop to 4 percent in 2020 by reducing the portion going to the marketplace to 1 percent of the premiums.
Even at that level, the fee would still be higher than what insurance companies pay in the 34 states that don't have their own exchanges.
In those states, insurance companies that sell plans through healthcare.gov pay the federal government a 3.5 percent fee.
Rep. Deborah Ferguson, D-West Memphis and a chairman of the subcommittee, noted that the Arkansas marketplace's projections showed it would have more than $4 million in reserves at the end of 2020 if the fee stayed at 4.25 percent.
"That just seems ridiculous to me," she said.
According to the projections, the marketplace expects to end this year with about $1.6 million in reserves.
By the end of 2019, that will grow to about $3.6 million, it estimated.
Keeping the fee at 4.25 percent would add an additional $938,250 in reserves at the end of 2020, while reducing it to 4 percent would add $99,500.
The subcommittee's recommendation will go to the Legislative Council, which must submit its own findings to the leaders of the House and Senate by Dec. 1.
The legislative recommendations aren't binding on the marketplace's board, which has the final say, Ferguson said.
The subcommittee is also studying whether the marketplace's operations should be shifted to the state Insurance Department.
At a meeting in September, Insurance Commissioner Allen Kerr said the department could handle the marketplace's responsibilities at an annual cost of $505,000 to $571,000, compared with the $3.8 million the marketplace spent in the fiscal year that ended June 30.
Kerr said the department could pay the costs from fees it already collects and wouldn't need to charge a separate fee to support the state exchange. As a result, the state's exchange fee would drop to 3 percent, which would go directly to the federal government.
That move, however, would require removing special language attached to the department's appropriation bill that prohibits it from promoting enrollment in the exchange.
Ferguson said the subcommittee will continue discussing the idea next month.
Metro on 11/16/2018