On February 26, Gov. Beebe told members of his Republican-controlled legislature that, after a face-to-face meeting with Health and Human Services Secretary Kathleen Sebelius, the Obama administration had agreed to allow Arkansas to expand its subsidized insurance exchanges to the low-income population that the law had otherwise slated to gain coverage under Medicaid.
“Basically [HHS has] agreed to give us about everything that we’ve asked for,” said Beebe. “What that really amounts to is taking the Medicaid population that would be expanded…and use those federal Medicaid dollars and purchase insurance through the exchange. So they would buy private insurance through the exchange for the entire population, and [HHS has] given us permission to do that.”
Expanding the exchanges would improve their cost-efficiency
The Arkansas Department of Human Services, however, came to a different estimate than the CBO did. DHS hired Optumas, an actuarial consulting firm, and worked with legal consultants and the Arkansas Insurance Department to come up with an Arkansas-specific estimate of the fiscal cost of expanding the exchanges instead of Medicaid. “These Arkansas estimates,” writes DHS in a memo, “are less than one-third of the Congressional Budget Office cost estimate widely cited in press accounts.”
DHS cites three principal differences between their estimates and CBO’s. First, the CBO only estimated the cost of expanding exchanges to adults between 100 and 138 percent of the federal poverty level, compared to the 0-138 percent expansion envisioned in Arkansas.
Second, expanding the exchanges instead of Medicaid would result in a “market transformation” that would double the risk pool in the exchanges, improving the market power of exchange plans, while increasing competition among the plans to provide a cost-efficient service.
Third, the CBO estimate assumed a wide gap between Medicaid’s payments to doctors and hospitals, relative to those from exchange-based plans. DHS estimates that the actual difference in Arkansas is less than 25 percent, much narrower than the national average.
If Arkansas is right, Obamacare will be transformed
There can be little doubt that private insurers in the exchanges would provide far superior coverage to the poor than Medicaid would. The biggest roadblock to expanding the exchanges has been their significantly higher fiscal cost. If the new Arkansas analysis is sound, however, that concern could be alleviated in dozens of states that are currently on the fence, especially those states in which Medicaid reimbursement rates are closer to those of private insurers.
Indeed, there are 23 states with higher Medicaid reimbursement rates (relative to Medicare’s) than Arkansas, when it comes to overall physician services: Georgia, Virginia, Oregon, Louisiana, South Carolina, Washington, Kansas, Vermont, North Carolina, South Dakota, Iowa, Connecticut, Delaware, Oklahoma, Nebraska, North Dakota, Idaho, Montana, Nevada, Arizona, New Mexico, Alaska, and Wyoming. In these states, and also in eight states slightly below Arkansas in reimbursement rates—Alabama, Massachusetts, Mississippi, Maryland, Colorado, Kentucky, Wisconsin, and West Virginia—expanding Medicaid via the exchanges might be a truly realistic and cost-effective option.
96% in 2017; 94% in 2018; 92% in 2019, and then 90% in 2020
That said, is Arkansas adopting the Paul Ryan model, give the recipient money to buy coverage on the Arkansas State Ins. Exchange ??
There is no question that expanding Medicaid is a death nail
quote:Ah. The cocaine dealer strategy.
There is no question that expanding Medicaid is a death nail to states like Louisiana. The Feds would pay the first 3 years but then Louisiana is on the hook for 10% of the cost after that when cost start to explode.
quote:Sure. This is why state-level policies > federal level policies.
If the Arkansas actuaries are correct in their numbers then Jindal should adopt this plane ASAP and buck Medicaid expansion.
Benefit Mandates (also effective Jan. 1, 2014):
Limit deductibles for health plans in the small group market to $2,000 for individuals and $4,000 for families unless contributions are offered that offset deductible amounts above these limits. This deductible limit will not affect the actuarial value of any plans.
Limit any waiting periods for coverage to 90 days.
Allow states the option of merging the individual and small group markets.
Create an essential health benefits package that provides a comprehensive set of services, covers at least 60% of the actuarial value of the covered benefits, limits annual cost-sharing to the current law HSA limits ($5,950/individual and $11,900/family in 2010), and is not more extensive than the typical employer plan.
Require all qualified health benefits plans, including those offered through the Exchanges and those offered in the individual and small group markets outside the Exchanges, except grandfathered individual and employer-sponsored plans, to offer at least the essential health benefits package.
The states are also required in the individual and small group markets (including the Exchnages) to offer four distinct benefit tiers that cover at least 90%, 80%, 70%, and 60% respectively of the actuarial value of the covered benefits similar to what is listed above in describing the essential benefits package.
I seem to recall that a few months ago I posted a question as to why Louisiana was not participating in an exchange and was told that Jindal was doing the right thing by completely ignoring the ACA and not participating in any way.
We have a significantly higher Medicaid expense per capita than most states. If mandated by the Feds and implemented by the states there is no wiggle room in offsetting the cost of the program. You can't blame any Republican Governor for being apprehensive about expanding Medicaid?