State-run health-insurance exchange back on table

Saturday, November 17, 2012

— Arkansas’ nearly year-long plan for running an insurance exchange in partnership with the federal government took an unexpected twist Friday as a new federal deadline extension created breathing space to resurrect a long-dead idea: a state-run exchange.

Late Thursday, the U.S. Department of Health and Human Services pushed back the deadline until Dec. 14 for states to signal what type of exchange they want: federally run, a state-federal partnership or a state-run operation. The extra time has given new life to the option of a state run exchange - an idea rejected by the Legislature in 2011.

“It’s a chance to get even more state control than we have now. That’s why we’re willing to keep talking about it,” said Matt DeCample, spokesman for Gov. Mike Beebe. The governor and Insurance Commissioner Jay Bradford have preferred a state-run exchange the whole time, DeCample said, but now it’s up to lawmakers to examine the option.

State legislators hadn’t contacted Beebe by early Friday afternoon to reopen the issue, DeCample said, but that could change as more states are taking a second look.

“After the results of the elections, there is a greater acceptance that these exchanges are going to happen,” DeCample said.

Beebe sent a letter Thursday to the federal agency - before the new deadline was announced - requesting approval of the state’s plan to run a state-federal partnership exchange to begin in October for an estimated 326,000 state residents.

A federal partnership would allow Arkansas “to retain as much control and autonomy as possible ... rather than concede that control to Washington, D.C.,” Beebe wrote.

But Beebe’s letter was written before the last-minute federal delay, which has given Arkansas a second chance for a state-run exchange, DeCample said. Beebe’s administration will contact the federal agency by Monday to keep the state’s options open.

Starting Jan. 1, 2014, people can shop for health insurance on the exchange, most of them with federal subsidies to help pay premiums. Arkansas officials have said that the exchange would cover many of the approximately 500,000 Arkansans who don’t have health insurance, reducing that number by 60 percent. No policy could cost more than 9.5 percent of an individual’s or family’s income, and subsidies would extend to those making up to 400 percent of poverty.

The exchange was a key part of the 2010 Patient Protection and Affordable Care Act championed by President Barack Obama. In June, the U.S. Supreme Court upheld most of the law.

Since December 2011, Bradford, a former Democratic lawmaker, has led the planning effort. On Friday, he said that Arkansas is the most prepared of the five states that have indicated they want a state-federal partnership.

“What we’ve done is the same thing you would do for a state exchange except we’d need to go a little further,” Bradford said, adding that the state could easily make the switch if lawmakers went along.

Rep. John Burris, a Harrison Republican, said shifting to a state plan should be discussed, but he criticized the federal government and the Beebe administration for having rushed planning for a deadline that no longer exists, then replacing it with a new deadline only a month away.

“It makes decisions more difficult. We’ve always maintained there was time, but they were more concerned with talking points and rhetoric,” Burris said. Still, he said: “Things are always worth discussing. Now that they’ve admitted their error [about a firm deadline] we can proceed.”

Burris said he’s discussing the state’s options with members of the congressional delegation because, he said, they can get better information about federal plans than the state Insurance Department.

“I think [the Insurance Department] had a sole focus on implementing as fast as possible, sometimes at the expense of good information, sometimes against the will of what the people of Arkansas want,” Burris said.

Bradford said his department merely implemented existing federal policy after legislators opted not to craft a plan of their own.

“We had to live with the rules [the federal government] set forth,” Bradford said.

Any change to the exchange’s structure should incorporate more legislative oversight, perhaps something similar to how lawmaker’s oversee the state lottery, Burris said.

The current system gives “too much power to Jay Bradford; there’s no legislative oversight,” Burris said. Any new blueprint for the exchange should not involve “completely vesting control in one person.”

Bradford said his planning committees have had wide latitude to plan how to structure the exchange and include consumers, advocates and insurance industry representatives. He said any oversight committee should have similar diversity and should accept his department’s input.

As for one-man rule, Bradford said, that happened by default.

“Due to lack of any movement from the legislative side, DHHS started deeming me responsible. I was the last man standing on this,” Bradford said.

He said he recognized that the Legislature should have substantial input into the exchange’s structure and any oversight.

Bradford said he would take an $18.6 million federal exchange planning grant to a subcommittee of the Arkansas Legislative Council on Dec. 13, one day before the new federal deadline. He said that might be enough time for the state to change direction on what type of exchange it wants.

Many states waited until the Nov. 6 presidential election to make a decision on how they would set up their exchanges. After the Supreme Court ruling, many Republican-ruled states stalled on preparations for their exchanges, anticipating that Congress would dismantle the law if GOP nominee Mitt Romney won the election.

After Romney’s defeat, Republican governors around the country have scrambled to put something in place by the federal deadline. The Obama administration, at the behest of Republican governors, moved the deadline back to give those states more time to plan.

As of Friday, the former deadline, 16 states had yet to signal which of the three options they favored, while 17 states have indicated that they prefer a state-run exchange, and 12 had suggested that they want a federal option. Among neighboring states, Oklahoma, Texas, Louisiana and Missouri have suggested they want a federally run exchange, while Mississippi appears to have opted for a state-run exchange. Tennessee’s decision is still pending, according to information provided by The Associated Press, the U.S. Department of Health and Human Services and the Urban Institute.

Arkansas is way ahead of the game, Bradford said, but an enormous amount of planning remains to be done by October, when hundreds of thousands of Arkansans sign up for health insurance.

“Whatever happens with this exchange, this process, by next fall we need to have that damn thing ready,” Bradford said.

Front Section, Pages 1 on 11/17/2012