Health-insurance marketplace: letters of intent from carriers due today | Arkansas Blog

Health-insurance marketplace: letters of intent from carriers due today

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Arkansas intends to have two carriers in each service area
  • Arkansas intends to have two carriers in each service area

Today is a big first test for implementation of the Affordable Care Act in Arkansas, particularly the so-called “private option” for Medicaid expansion. Letters of intent are due to the Arkansas Insurance Department from insurance carriers wishing to sell on the state’s health-insurance exchange (including the plans offered to the expansion population via the private option).

Policymakers are heavily focused on increasing carrier competition and are hoping that six to eight issuers will enter the new marketplace. According to AID officials, Blue Cross Blue Shield of Arkansas, Coventry, NovaSys/Celtic, QualChoice, United Heathcare, and United Security Life and Health Company have attended multiple outreach sessions and showed strong interest; they are also hoping that the state will get one or more federal multi-state plans.

AID officials have said that significantly more carriers showed interest after the marketplace was effectively doubled by adding the Medicaid expansion pool through the private option. Policymakers have also attempted to make the barriers to entry in 2014 low. AID's guidance for carriers hoping to offer plans on the exchange was updated in late May and states that “Year 2014 is considered a ‘transition to market’ year and, as such, AID will allow flexibility with some certification standards in an effort to attract more issuers to the changing Arkansas Marktplace.” You can see the full updated guidelines here.

We reported on one "transition to market" tweak a little more than a week ago: no competitive bidding for the expansion pool, which is good news for low-income beneficiaries but undercuts one of the arguments for the impact of competition in the private option to drive down prices (see this post for fuller explanation). Sen. David Sanders, a key Republican backer of the private option, said that he didn't necessarily agree with the choice to nix competitive bidding in Year One but said that he understood the decision. He agreed that the focus in the first phase of implementation should be on getting as much carrier competition as possible, which would itself tend to lower prices. "That's the preeminent issue," he said. "There's a significant difference in Year One compared to others because there's a transition to market. We're literally creating a brand new insurance market."

The other big question is how much of the state the carriers are interested in covering. The "private option" legislation mandates that each service area in the state (see map above) has two issuers offering qualified health plans on the exchange, and AID has a goal of three in each area. Initially, again to attract carriers, the only requirement for each carrier is coverage of one service area. However, if that leaves one or more service areas with not enough carriers, AID will be charged with negotiating with the carriers over the course of the month to achieve competition in each area.

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