LITTLE ROCK — Correction: Arkansas will have to use state funds to establish its own health insurance exchange if it misses an October 2014 deadline for federal setup funds. This article incorrectly stated that state funds would be used to run the exchange. “By law, exchanges must be self-sustaining and all operational costs are expected to come from premium fees, not state dollars,” according to Insurance Department spokesman Heather Haywood.

A state senator who has favored ceding control of the state’s insurance exchange to the federal government said Tuesday that his committee will hold hearings next week to determine whether Arkansas should continue planning for a partnership with the U.S. Department of Health and Human Services.

Jason Rapert, a Bigelow Republican and chairman of the Senate Insurance and Commerce Committee, said an invitation to testify at the Feb. 27 hearing will be sent to Health and Human Services Secretary Kathleen Sebelius.

“I expect that she will send an emissary in her place. But she’s the one that’s always quoted. She seems to be the one that everyone goes to. So it would be helpful to us if she would appear and just answer those questions and be done with it,” Rapert said after a committee meeting Tuesday.

Rapert said he also planned to ask for testimony from experts from neighboring states who have already chosen an exchange model.

He would ask those state officials to “tell us why you’ve made your decision,” Rapert said.

All the states bordering Arkansas have chosen a federally run exchange.

Under the federal Patient Protection Affordable Care Act, states have three ways to set up their exchanges: run the exchanges themselves, let the federal government run them, or partner with the federal government.

The exchanges are designed to be online marketplaces where the uninsured and small businesses can buy health coverage.

Federal subsidies to defray the cost of insurance will be available for those earning up to 400 percent of the federal poverty level, or $44,680 for an individual and $92,200 for a family of four.

Seventeen states and the District of Columbia say they will run their own exchanges. Twenty-six states want the federal government to do it, according to the Henry J. Kaiser Family Foundation.

Arkansas is one of seven states planning to partner with the federal government. Doing so allows more state control over consumer assistance and the regulation and certification of insurance plans.

The state has received nearly $28 million in federal grants to set up the partnership exchange, and planners have spent more than a year hashing out details of how it would work.

Insurance Commissioner Jay Bradford said Tuesday that the partnership model works best for Arkansas.

Changing course just months before enrollment starts in October will complicate public-education efforts and erase months of intensive planning, he said.

“At end of the day, the Legislature will see it benefits their constituents, but it is somewhat complex and the more openness we have about it, the better the consumers will fare,” Bradford said after the meeting.

Bradford has said repeatedly that a partnership model will benefit Arkansans because any consumer complaints will be handled by the Insurance Department, not the federal government.

Gov. Mike Beebe supported a state-run exchange, but the Legislature killed that effort in 2011.

Since then, Beebe has backed the partnership model while Republicans have become increasingly supportive of stripping the state of the rest of its role. Rapert has taken the lead on the issue so far this legislative session.

“Based upon inconsistencies, my comfort has been with the federal exchange because [state] officials won’t seem to answer the questions,” Rapert said. “The bottom line is that we have to be confident on what the rules of engagement will be.”

Rapert said he would keep “an open mind” on what type of exchange model the state should pursue until after the hearing. Another hearing might follow on March 4, he said during the meeting.

“If I can get to the bottom line of the best path for the state, I’ll support that path,” Rapert said. “I want local control and that’s why I never supported Obamacare in the first place.”

Sen. Keith Ingram, a West Memphis Democrat and the committee’s vice chairman, supports an eventual switch to a state-run model. Ingram thinks the state needs to preserve its options under the partnership model.

If the state doesn’t continue its current plans, it will be very difficult in future years to get “home rule” for the exchange, he said.

The federal government has set an October 2014 deadline for the state to qualify for federal funds to switch to a state-run exchange. If the state scraps efforts to set up an adequate infrastructure now, it would complicate efforts to switch to a state-run exchange, Ingram said.

After October 2014, Arkansas would have to use state dollars to run its own exchange, said Cynthia Crone, the exchange’s planning director.

That would be “prohibitively expensive,” Ingram said.

One advantage to a staterun exchange, aside from local control, advocates say, is that it would be cheaper for consumers, as the 3.5 percent federal premium fee applied to exchange policies would disappear.

“This is a complex issue, and it would be a complex issue without partisan politics,” Ingram said.

He thinks Rapert is sincere in his quest for more information, he said.

“I take Sen. Rapert at face value. I have no reason to doubt that he’s sincere in that,” Ingram said. “I’d like some clear discussion. The opportunity to hear pros and cons. I think that’s the most important thing.”

The state’s exchange will begin operation in January 2014. At least 211,000 people are expected to enroll.

Arkansas, Pages 10 on 02/20/2013