Four companies indicate they will apply to offer health-insurance plans in Arkansas through an exchange that will begin operating Oct. 1, the state Insurance Department announced Tuesday.
The Chicago-based Blue Cross and Blue Shield Association, Arkansas Blue Cross and Blue Shield, St. Louis-based Centene Corp. and Little Rock-based Qual-Choice Health Insurance submitted letters of intent to the department by the midnight Monday deadline, department spokesman Heather Haywood said.
Created by the federal 2010 Patient Protection and Affordable Care Act, health-insurance exchanges are being set up in every state and touted as a way to increase competition among health-insurance companies, particularly in states where one company dominates.
In Arkansas, for instance, Arkansas Blue Cross and Blue Shield insured about 77 percent of the 118,000 people in the state who were covered by comprehensive individual health policies last year, according to the Insurance Department.
Arkansas’ exchange will allow the more than 500,000 people in the state who lack health insurance to shop for coverage through a federal website.
For low- and moderate-income Arkansans, the coverage will be subsidized, either through federal tax credits or through the expansion of Medicaid approved by the state Legislature in April.
Cynthia Crone, planning director for Arkansas’ exchange, said she was happy with the number of companies that indicated they plan to participate in the exchange.
“I wish it had been 18, but four is good,” Crone said.
Representatives of at least six companies had expressed interest in offering plans through the exchange. Crone said she didn’t know why some chose not to submit a letter.
State Rep. John Burris, R-Harrison, called the number of submissions “very good news,” noting that two of the companies, Centene and the national Blue Cross association, “currently have no significant presence in the state.”
The submissions show that Arkansas’ method of expanding Medicaid - through private plans offered on the exchange under the so-called private option - made the state more attractive to insurance companies, Burris said.
“Submitting a letter of intent and then subsequently a bid, I think, shows a level of confidence that there’s going to be the market there that they need to be profitable and have a presence in the state,” he said.
“I think the private option kind of opened the door for that.”
The Legislature’s expansion extended Medicaid eligibility to about 250,000 adults with incomes of up to 138 percent of the poverty level - $15,860 for an individual or $32,500 for a family of four.
Those who are eligible will be able to enroll in a plan on the exchange and have their premiums covered by Medicaid.
Those with higher incomes - up to 400 percent of the poverty level - will be eligible for tax-credit subsidies that will cover part of their premiums. That income threshold is up to $45,960 for an individual and $94,200 for a family of four.
Under the Affordable Care Act, companies offering coverage through the exchange must label plans on the basis of the amount of medical expenses they are designed to cover.
Bronze plans, for instance, must be designed to cover 60 percent of expenses. Silver plans will cover more - 70 percent of expenses - but have a higher premium. Gold and platinum plans will offer even more coverage, also with higher premiums.
Companies can also offer low-premium catastrophic coverage plans to people younger than age 30 or those who would otherwise have to pay more than 8 percent of their incomes to buy insurance.
Each company participating in an exchange must offer at least one silver plan and one gold plan. Medicaid recipients will be limited to enrolling in a silver plan, but their copayments and deductibles will be reduced or eliminated completely, depending on their income.
The companies that submitted letters have until June 30 to submit details of the plans they will offer. The plans must be approved by the Insurance Department and the U.S. Department of Health and Human Services. The national Blue Cross association’s plan, which would be offered in 31 states, also must be approved by the federal Office of Personnel Management.
Details of the approved plans will be announced Sept. 4. Coverage will begin Jan. 1.
The Insurance Department divided the state into seven regions in which companies can offer plans. Arkansas Blue Cross and Blue Shield plans to offer “a number of policies” in the bronze, silver, gold and catastrophic coverage levels in each region, meaning the plans will be available in every county in the state, spokesman Max Greenwood said. The company’s national affiliate also hopes to offer plans in each region, she said.
“We’ve made a commitment to make sure that people have choices across the state,” Greenwood said.
QualChoice will offer plans in five regions - except the 24 counties in the southwest and southeast regions, Chief Executive Mike Stock said. He said the company chose the regions based on where it has the largest number of providers in its networks.
The company likely will offer plans in each of the coverage tiers, he said.
Last year, the company covered 6,627 people in the individual insurance market, or less than 6 percent of that market, according to the Insurance Department.
The exchange represents an opportunity for the company, but a risky one, since the health-care expenses of those who will sign up for coverage isn’t known, Stock said.
“It’s definitely somewhat of a guessing game,” Stock said.
Representatives of Centene didn’t return calls seeking comment Tuesday.
State Insurance Commissioner Jay Bradford had set a goal of having plans offered by at least three insurance companies in each of the state’s 75 counties. The Medicaid expansion legislation requires the state to have at least two companies offering plans in each county.
The Insurance Department on Tuesday declined to release copies of the letters, which specify the regions in which the companies hope to offer plans.
The department is evaluating the companies’ proposed regional coverage, Crone said, describing the situation as “a work in progress.”
“Based on what I’m seeing, we feel really good about there being choice,” Crone said.
Front Section, Pages 1 on 06/05/2013