AFP Arkansas Healthcare Testimony

March 29, 2011

Prepared Statement on Arkansas House Bill 2138
March 28, 2011 (updated)
Teresa Oelke, Arkansas State Director, Americans for Prosperity

Americans for Prosperity Arkansas opposes HB 2138 and SB 880. Both bill will be scored on AFP’s legislative score card.

Courts must settle the issue first.
To begin, until the constitutionality of the national health care law is determined, it would be premature to create this government bureaucracy that may or may not be funded by the federal government upon the court’s rulings. At minimum, the committee should consider a clause eliminating the exchange’s bureaucracy if the national law is found unconstitutional.

Other states are in no hurry.
Secondly, as many of you know, the rules and regulations regarding health care exchanges have not been written. Legislators should consider allowing the regulations to be written, which also provides an opportunity to learn best practices from other states. Five states have returned the planning grant. It is untrue that the 45 states who accepted grants are moving forward with legislation. For example, Georgia just dropped their bill to set up an exchange. Arizona, who accepted funds, will not pass any legislation this session. Gov. Mitch Daniels has requested six concessions from Secretary Sebelius before they will implement an exchange.

Current models include Massachusetts and Utah. Massachusetts is not the only state to look at for concerns. Utah attempted to create a looser exchange… and after 4 years, leadership changes, and numerous false starts, the best that can be said is that they are STILL in ‘beta-testing’ mode. If this will be an example of “simple to create” with “minimal administrative cost”, the state and its citizens are in big trouble.

This can be dealt with in the fiscal session.
This is an issue that can be dealt with in the fiscal session of 2012 because it does pose significant impact to our state budget.

According to the national law, no grant for the exchanges will be offered after January 1, 2015 making the state of Arkansas fully responsible for the cost of running the exchange:

Page 55 of the hr3590
(1) PLANNING AND ESTABLISHMENT GRANTS.—There shall be appropriated to the Secretary, out of any moneys in the Treasury not otherwise appropriated, an amount necessary to enable the Secretary to make awards, not later than 1 year after the date of enactment of this Act, to States in the amount specified in paragraph (2) for the uses described in paragraph (3).
(2) AMOUNT SPECIFIED.—For each fiscal year, the Secretary shall determine the total amount that the Secretary will make available to each State for grants under this subsection.
(3) USE OF FUNDS.—A State shall use amounts awarded under this subsection for activities (including planning ctive- ties) related to establishing an American Health Benefit Exchange, as described in subsection (b).
(4) RENEWABILITY OF GRANT.— (A) IN GENERAL.—Subject to subsection (d)(4), the Sec-
retary may renew a grant awarded under paragraph (1) if the State recipient of such grant—
(i) is making progress, as determined by the Sec- retary, toward—
(I) establishing an Exchange; and
(II) implementing the reforms described in subtitles A and C (and the amendments made by such subtitles); and (ii) is meeting such other benchmarks as the Sec-
retary may establish.
(B) LIMITATION.—No grant shall be awarded under this subsection after January 1, 2015.

And again,

page 60- and addressed ongoing funding for the exchange:
H. R. 3590—60
(A) NO FEDERAL FUNDS FOR CONTINUED OPERATIONS.— In establishing an Exchange under this section, the State shall ensure that such Exchange is self-sustaining beginning on January 1, 2015, including allowing the Exchange to charge assessments or user fees to participating health insurance issuers, or to otherwise generate funding, to support its operations.

In addition, if the Arkansas exchange creates a coverage benefit mandate that does not end up on the national “essential benefit” package, the state will be 100% on the hook for the full cost of those benefits…those are dollars legislators will have to find.

This bill turns over our health insurance records to the IRS who will police them.
This bill allows for massive transfer of employer and individuals information to the IRS to make sure Arkansans are compliant with the individual mandate, subjecting them to the policing of their health care policies by the IRS.

Page 28: the Health Care and Education 18 Reconciliation Act of 2010, Pub. L. No. 111-152, grant a certification 19 attesting that, for purposes of the individual responsibility penalty under 20 section 5000A of the Internal Revenue Code of 1986, as it existed on January 21 1, 2011, an individual is exempt from the individual responsibility 22 requirement or from the penalty imposed by that section because: 23
(A) There is not an affordable qualified health plan available 24 through the exchange or through the individual’s employer to cover the 25 individual; or 26
(B) The individual meets the requirements for any other 27 exemption from the individual responsibility requirement or penalty; 28
(11) Transfer to the Secretary of the United States Department of the 29 Treasury the following: 30
(A) A list of the individuals who are issued a certification 31 under subdivision (10) of this section, including the name and taxpayer 32 identification number of each individual; 33
(B) The name and taxpayer identification number of each 34 individual who was an employee of an employer but who was determined to be 35 eligible for the premium tax credit under section 36B of the Internal Revenue 36 As Engrossed: H3/21/11 HB2138 29 03-02-2011 14:42:17 DLP125
Code of 1986, as it existed on January 1, 2011, because: 1
(i) The employer did not provide minimum essential 2 coverage; or 3
(ii) The employer provided the minimum essential coverage, 4 but it was determined under section 36B(c)(2)(C) of the Internal Revenue Code 5 of 1986, as it existed on January 1, 2011, to be unaffordable to the employee 6 or not provide the required minimum actuarial value; and 7
(C) The name and taxpayer identification number of: 8
(i) Each individual who notifies the exchange under 9 section 1411(b)(4) of the Patient Protection and Affordable Care Act, Pub. L. 10 No. 111-148, as amended by the Health Care and Education Reconciliation Act 11 of 2010, Pub. L. No. 111-152, that he or she has changed employers; and 12
(ii) Each individual who ceases coverage under a qualified 13 health plan during a plan year and the effective date of that cessation; 14
(l2) Provide to each employer the name of each employee of the 15 employer described in subdivision (11)(B) of this section who ceases coverage 16 under a qualified health plan during a plan year and the effective date of 17 the cessation; 18
(13) Perform duties required of the exchange by the Secretary of the 19 United States Department of Health and Human Services or the Secretary of the 20 United States Department of the Treasury related to determining eligibility 21 for premium tax credits, reduced cost-sharing, or individual responsibility 22 requirement exemptions; 23
(14)(A) Select entities qualified to serve as “Navigators” in 24 accordance “with section” 1311(i) of the Patient Protection and Affordable Care 25 Act, Pub. L. No. 111-148, as amended by the Health Care and Education 26 Reconciliation Act of 2010, Pub. L. No. 111-152, and award grants to enable 27 Navigators to:

Bill puts one individual in control of an entire industry.
This bill creates more of an insurance czar with very little representation and input for the citizens of Arkansas. Adequate Legislative oversight should be mandatory, for we know that old adage about absolute power.

Page: 24
The board shall consist of seven (7) voting members appointed by the Insurance Commissioner.
Page 24: A) The exchange shall operate subject to the supervision and control of the Board of Directors of the Arkansas Health Benefits Exchange.
(B) The exchange is created as a political subdivision, instrumentality, and body politic of the State of Arkansas, and as such, is not a state agency.
(B) At least three (3) of the seven voting board members shall have experience in health care benefits administration, health care economics, or health insurance or health-insurance-related actuarial principles.
(C) One (1) of the voting board members shall represent the interests of health-benefit-plan consumers in this state.
(D) One (1) of the voting board members shall represent the interests of small employers in this state.
(E) One (1) of the voting board members shall be a representative of a hospital located in Arkansas.
(F) One (1) of the voting board members shall be a health care provider licensed to practice in Arkansas.

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