Legislators Told Arkansas Still Needs State Exchange

Arkansas should continue its efforts to establish a state-based insurance exchange, the executive director of the state’s Health Insurance Marketplace said Monday, even though a recent Supreme Court ruling makes it less necessary to do so.

Cheryl Smith Gardner told the Arkansas Health Insurance Marketplace Legislative Oversight Committee Monday that Arkansas should set up a state health insurance exchange because doing so would allow it to customize its own marketplace and to run it more cheaply than the federal exchange is run. She said Republican alternatives to the Affordable Care Act (Obamacare) consistently involve some method of premium support where individuals receive government help to pay for insurance. That reform would require a state-based exchange.

Smith Gardner said another reason to move to a state-based exchange is the fact that plans purchased on the federal exchange include a 3.5% surcharge that will surely increase because it doesn’t now cover the federal government’s costs. The state exchange’s board of directors has recommended a 3% surcharge.

Exchanges are online marketplaces created by the Affordable Care Act where small businesses and individuals purchase insurance. Fourteen states run their own exchanges, while the rest are managed by the federal government.

Lower-income individuals who purchase insurance through the exchange are eligible for tax subsidies. Last week, the U.S. Supreme Court ruled in the King v. Burwell case that subsidies indeed are available for residents of states using the federal exchange. A line in the Affordable Care Act says subsidies are available through exchanges “established by the State.”

Arkansas began considering moving toward establishing a state-based exchange as a result of Act 1500 of 2013. It’s still possible that it ultimately will remain with the federal exchange.

Smith Gardner said Arkansas has an advantage in that it wasn’t one of the first states to try to establish an exchange, so it avoided some of the pitfalls faced by the early adopters and can learn from their experiences. Meanwhile, the state, which has been awarded a $100 million federal grant, also is in better shape than others that have yet to move toward creating a state exchange.

Smith Gardner said a common mistake made by early states was not testing the processes enough, so Arkansas is doing that in three waves, starting with processes involving employers. Staff have created 270 potential scenarios to be tested.

Surveys have shown that Arkansans want a state-based exchange, Smith Gardner said. Meanwhile, staff have tested more than 100 logos and names for the exchange. The Marketplace’s board of directors will decide on those when it meets Wednesday.