Arkansas insurance officials report marketplace funds, say 1.25% user fee removal will lower 2020 premiums

Insurance Commissioner Alan Kerr and insurance-department staff briefed the joint Public Health committee on the financial status of the Arkansas Health Insurance Marketplace and the department’s initial review of insurers’ 2020 rate filings. Kerr said the department took operational control of the marketplace in April and presented fee-collection totals, estimated year-end collections and an expenditure and staffing comparison showing lower ongoing costs now that marketplace payroll and certain IT fees no longer flow through the state office.

Kerr and staff said the 1.25% marketplace user fee that had been assessed in Arkansas will be eliminated effective plan year 2020. Ryan James of the insurance department estimated that removal of the state user fee will result in roughly $13,000,000 in combined savings to policyholders and Arkansas Works enrollees for plan year 2020, because carriers factored the fee into their premium filings and will reflect the reduced rate in their submissions.

Department slides show four carriers offering plans statewide for 2020 so that residents in all 75 counties will have at least four plan options. Ambetter requested an average 1.9% increase in its filing; other carriers presented differing mixes of gold, silver and bronze offerings. Kerr explained that federal CMS technology fees are paid directly by carriers to CMS and do not pass through the state’s accounts.

Committee members asked whether remaining marketplace funds are held in a trust. Kerr said collected funds are held in an agency fund to cover marketplace operations and noted the legislature appropriated up to $500,000 annually to support the division in future years; roughly half of that appropriation is expected to fund a federally required independent “navigator” contract to provide consumer assistance.

Representative Deborah Ferguson and others pressed for clarity on office lease costs and on how much of the collected funds would be used for operations, while Senator Raybirt and others emphasized that the removal of the fee should be passed on to consumers through reduced filings. The department provided county-by-county enrollment sheets to committee members for constituent inquiries and said it does not have data showing where people go after they leave the marketplace (for example, employer coverage versus uninsurance).

The committee did not take formal action on rates; department staff said rate filings will continue through the standard regulatory process and carriers may seek other rate adjustments (for example, provider reimbursement changes) separately.