Analysis: Health Exchange Debate not Over in Arkansas

The Arkansas insurance commissioner’s decision to give up on the state running a health insurance exchange isn’t the end of the fight over implementing the federal health care law that required it. It’s just a preview of the fights to come.

Few were surprised earlier this month when Commissioner Jay Bradford announced that he was giving up on efforts to have the state run the exchange, paving the way for the federal government to run the program instead.

Legislation to have the state run the exchange, an online marketplace for individuals and small businesses to shop for health insurance, stalled in the Legislature after Republicans blocked the Insurance Department’s budget over the issue. After that, Gov. Mike Beebe said he wouldn’t issue an executive order implementing the exchange anyway.

Bradford, however, didn’t seem to be on the same page and vowed to fight on. Holding planning meetings and appealing to lawmakers, Bradford said he believed there was still a chance to win over skeptics.

“I can’t just sit around and wait and not do anything,” Bradford said over the summer.

That optimism faded, however, as Republican lawmakers opposed Bradford seeking more federal funds to plan for the health care exchange. Beebe didn’t need the Legislature’s approval, but said he wouldn’t apply for the funds without its backing.

Bradford, who made the announcement after an advisory group he formed to plan for exchange recommended that it and related panels disband, said he had remained optimistic that he could convince lawmakers on a state-run exchange.

“I wanted to give it every possible effort to protect Arkansans,” Bradford said last week. “I guess I was the last dog to die.”

Beebe said the announcement shouldn’t have come to a surprise, since he had said months ago he had given up on the idea. But the Democratic governor said he had thought Bradford might be able to sway some opponents.

“I thought he might be able to keep information flowing that might cause some folks in the General Assembly that it was probably a wise thing for us to do our own rather than let Washington do it,” Beebe said. “It didn’t have that effect.”

Bradford’s decision instead sets the stage for the debate Democrats and Republicans are likely to wage next year as the GOP tries to build on its gains in the 2010 election. With 135 seats up next year, Republicans believe they have a shot at winning one or both chambers of the majority-Democrat Legislature.

For Republicans, it offers an opportunity for Republican legislators who opposed the exchange to brag that they blocked the implementation of the health care law that they vowed to fight at the state level in last year’s election.

The state Republican Party, which made its gains partly by tying dislike of President Barack Obama and his policies to state-level races, made that clear hours after Bradford’s announcement with a release calling on Democrats to say whether they supported the health overhaul.

For their part, Beebe and Democrats are using the fight to blame Republicans for a decision that they saw will give the federal government more of a say over how to set up the marketplace.

And with the U.S. Supreme Court set to consider a challenge to the health overhaul next year, it’s a debate that’ll continue to play a role in next year’s election and possibly future legislative sessions.

Bradford hinted at that debate as he pivoted his focus to how a federally run exchange would affect Arkansas. Bradford said he was worried that a federal-run exchange could cost the state millions it collects in premium taxes since it’s unclear where that money would go under the program. He also raised the possibility that the state could pursue a partnership where it can manage some functions of the exchange without setting up its own.

Bradford said he would likely apply by the end of the year for a grant between $6 million and $7 million to study such a partnership.

House Minority Leader John Burris said the overhaul will be up for debate in the Legislature, particularly over costs that it could have to the state’s already financially strained Medicaid program.

“I don’t think it’s the job of the Arkansas Legislature to ignore consequences of federal laws without debating them,” Burris, R-Harrison, said.

At least one supporter of the exchange says he still believes there’s an opportunity to try again for a state-run marketplace. Rep. Fred Allen, D-Little Rock, said he’d like to see Legislature try again on a state run-exchange, though not during next year’s fiscal session.

“I think it’s in our best interest to let Arkansas run it,” he said.