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After Halbig, Arkansas Moving Towards A State-Based Exchange

Updated: Apr 13

Last week, the D.C. circuit court ruled in Halbig v. Burwell that Obamacare subsidies cannot flow into state that are participating in the federally-run exchange. If the ruling holds (it will almost certainly be appealed), this could be a game changer for the federal health care law: currently, only 14 states have state-run exchanges and, according to the ruling, are eligible for premium subsidies. The question is, will the 36 states that are in the federal exchange now move to state exchanges so their citizens can receive premium subsidies from taxpayers? Arkansas currently has a “federally-facilitate [sic] Marketplace Partnership (FFM),” according to Insurance Department spokeswoman Heather Haywood. Haywood says this qualifies as a federal exchange. Based on the logic of Halbig, Arkansans are not eligible to receive Obamacare subsidies. But the exchange implementation bill passed last session — spearheaded by two legislative warriors from White County, Senator Jonathan Dismang and Rep. Mark Biviano — provides an avenue for the exchange to transition from a federal exchange to a state exchange next year. Might the state bureaucracy now be even more interested in moving towards a state exchange in order to keep Obamacare payments flowing into Arkansas? At a hearing last week, exchange director Cheryl Smith told legislators she plans to recommend that the exchange board apply for federal grants next month to move towards setting up a state-run exchange. Smith said she will recommend the board request “$91 million to $133 million,” according to news reports. But just because we get the grant doesn’t mean we’ll necessarily go to a state exchange, according to what Smith told me today:

The Arkansas Health Insurance Marketplace is a separate entity and the charge of the AHIM is to determine whether and how the state should move toward a state-based exchange (as opposed to remaining in a partnership.)

The $133 million is essentially for “research.” According to CMS, Arkansas has already received close to $60 million in “marketplace grants” since 2011. So what’s $133 million more down the drain? State Senator David Sanders, the father of the Obamacare “private” option and the chairman of a committee that oversees the Obamacare exchange, said Smith “made a very strong case” for the funding request. I reached out to Sanders to see what he found so impressive in Smith’s presentation and also what he thought the impact of the Halbig ruling was. In a statement to The Arkansas Project yesterday, Sanders questioned my reading ability:

You read it wrong. She made the case for the grant, not the exchange.

When asked what the grant is for, Sanders said it’s for “planning.” When asked what the state is “planning,” Sanders said “planning for a lot.” But according to the Democrat Gazette, Smith said at the meeting that the money will be used “to pay for the exchange’s setup costs.” In this light, Sanders’s attempt to draw a distinction between a “planning grant” for setting up the exchange and the “exchange” is tough to take seriously. I mean, if you buy a fishing license, I guess you could argue that you’re just engaging in “plans” about whether to go fishing or not. But to me, it’s starting to look like you’re planning to go fishing. Today, Sanders followed up with a phone call to me, explaining that Smith made a compelling case “just for pursuing the grant to look at all of the options.” So I asked Sanders (specifically) what Smith said that made him think spending $133 million more was a good idea. He said:

Again, I think if you read the story…she put out a range of what they would look at. She didn’t make a compelling case to spend $130 million.

(Apparently I’m not the only journalist who misread Sanders’s remarks, since the ADG story says his comments were specifically in reference to the funding request.) What then did Smith make a compelling case to do? “For exploring our options,” Sanders said. So, to recap: Sanders was impressed by Smith’s proposal to get a grant to work towards setting up a state exchange and “explore our options,” but he’s not necessarily supportive of the spending and not necessarily in favor of a state-based exchange. Got it? I still don’t understand — and probably never will — why Republicans were so eager to fight a state-based exchange only up until the end of the 2013 legislative session. Legislators who previously argued against a state-based exchange because it would cost the state more money without giving us additional control over our healthcare system turned around in 2013 and argued the very opposite — that a state exchange would give us more control and save us money. But hey, that’s all in the past, right? Now, thanks to Halbig, Republicans have a new opportunity to resist a state exchange and actually work to counter the harmful effects of Obamacare, as so many of them claim they want to do. More tomorrow.

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