HB1492 vs SB343 – What to do about Arkansas’ Planned Obamacare Exchange

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Arkansan’s who now buy Obamacare insurance do it through a federal exchange but Arkansas passed a law that will soon make Arkansas create its own Obamacare Exchange. Meanwhile the large majority of states say “no” to creating a state exchange and three states dropped their state exchanges as a waste of time.

 HB1492 by Rep. Mary Bentley would stop the creation of the state exchange and leave things as is.  SB343 by Sen. Jim Hendren is the other bill on the subject. It has a misleading title and sends confusing messages. SB343 does not end the effort to shift to a state exchange, and depending on a federal court case either goes forward with a state exchange or puts the state exchange on hold while Arkansas bureaucrats continue to spend money on creating a state exchange. Conduit for Action supports HB1492 and opposes SB343.

 BACKGROUND

An “Exchange” is the government vehicle under which government subsidized insurance is sold. Obamacare envisioned each state setting up its own Obamacare exchange but so few states were willing to do so that the federal government setup up a federal exchange to operate within a large majority of the states.  Three states that agreed to set up a state-based exchange reversed course after spending many millions of dollars and dropped their exchanges in favor of the federal exchange.

Meanwhile Arkansas went against the flow and passed legislation in 2013 to transition from the federal exchange to a state-based exchange.  In September 2014, the board of the Arkansas Health Insurance Marketplace ratified the move to a state-based exchange in 2016 with coverage starting in 2017.

The U.S. Supreme court now has King v. Burwell before it.  The case challenges whether insurance bought through a federal exchange qualifies for a tax subsidy or if the tax subsidies only apply to state-based exchanges.  Opponents of Obamacare hope the court strikes down subsidies for insurance policies bought on a federal exchange because they see this as an opportunity to replace Obamacare with something much more reasonable.

CFA AGAINST SB343

 The title of SB343 is misleading.  The bill title “says” it prohibits “the establishment through state law of a State-Based Health Insurance Exchange in this state.” This is not accurate.  Within the language of the bill it states that depending on the outcome of a U.S. Supreme Court case Arkansas would either go forward with its planned exchange or would put it on hold awaiting further state action.

ALL the Democrats in the Arkansas Senate voted for SB343. Meanwhile, nine Republican senators refused to vote for it.

SB343 has an odd plan.  If tax subsidies under federal exchanges are validated by the court, SB343 would keep Arkansas on schedule to create a state exchange.  What?  If the court okays federal exchanges why create a state-based exchange?  SB343 would continue the state-based exchange in this case despite:

• the large majority of states went in the opposite direction and chose not to create a state-based exchange and instead rely on the federal exchange, as Arkansas does now; and
• three states dropping their state exchanges as unworkable in favor of a federal exchange.

So tell me again why the state needs to go in the opposite direction of most of the country and adopt a state exchange instead of just remaining with the federal exchange?

Under SB343, if the court invalidates tax subsides under federal exchanges, Arkansas would put its plan on hold awaiting more legislative action. The state exchange would merely be put on “hold” and not repealed.  If the plan is put on “hold”, the Arkansas Insurance Marketplace and its staff would still continue to spend money and continue to work on moving Arkansas toward a state-based Obamacare Exchange.

You may be thinking, “Surely it doesn’t say that.” Read SB343 for yourself.

(b) If the Board of Directors of the Arkansas Health Insurance Marketplace determines that the decision in King v. Burwell, 759 F.3d 358 (4th Cir.), cert. granted, _ U.S. _, 135 S. Ct. 475 (2014):

(1) Allows subsidies under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, and the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, for a state-based health insurance exchange, but not for a health insurance exchange operated by the federal government, then implementation of an appropriate health insurance exchange for the State of Arkansas shall be determined by a future act of the General Assembly; or

(2) Allows subsidies under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, and the Health Care Education Reconciliation Act of 2010, Pub. L. No. 111-152, for both a state-based health insurance exchange and a health insurance exchange operated by the federal government, then the authority of the Arkansas Health Insurance Marketplace to implement a state-based health insurance exchange shall not be affected by this act.

CFA SUPPORTS REP. BENTLEY’S HB1492

Representative Mary Bentley’s HB1492 is a clear bill with clear language that stops the Arkansas-based Obamacare Exchange and leaves things as is.