State Seeks Medicaid Waiver for Employee Groups

Kevin Ryan fears the rising number of uninsured Arkansans could wreak havoc on the state’s health care industry.

“The [industry] could be so stressed that it really does present an issue for all of us,” said Ryan, associate director of the Arkansas Center for Health Improvement in Little Rock. “The system won’t be able to supply the health care that we all want and need.”

A study recently released by the ACHI showed 456,000 Arkansans, or 17 percent of the state’s population, didn’t have health insurance in 2004. That was up 16 percent from 2001, when 392,000 Arkansans didn’t buy health insurance. Most of the people without health insurance were between the ages of 19 and 64 and worked either full- or part-time jobs.

Ryan said he fears some health care operators might close if they can’t continue to absorb the cost of providing free care to the uninsured.

“Widespread lack of health insurance impacts consumers, health care providers, health insurance carriers and communities,” he said.

Ryan said there is hope. A program that might reduce the number of uninsured in the state is waiting on approval from the U.S. Department of Health & Human Services.

The Arkansas Safety Net Benefits Program would allow employers to offer health care at cheaper rates. If approved, employers and their employees would pay the state of Arkansas a still undetermined fee for health insurance. The state, through the Department of Human Services, will use that money plus other state funds to draw down federal money to buy coverage from a private carrier, Ryan said.

To be eligible, the employer could not have offered health insurance in the previous 12 months before applying for the program.

It is still too early to determine how much the employer could save as a result of the program, Ryan said.

“This would represent a cost-effective alternative to those currently uninsured employers,” he said.

He hopes it will be approved by the end of the year and could be implemented in a year to 18 months after that.

“We feel strongly that if approved, this waiver program would represent an opportunity to significantly impact uninsured in the state,” Ryan said.

Other insurance carriers have been pushing low-cost products or other programs to fight the rising costs of insurance premiums.

Arkansas Blue Cross and Blue Shield, the state’s dominant insurer, said it has tried to market the different types of products and tout how affordable they are.

And QualChoice/QCA, based in Little Rock, started a program in 2004 with the North Little Rock Chamber of Commerce that offers group health insurance to small businesses and their employees. Using the state Health Insurance Purchasing Group legislation created in 2001, insurance is now offered to any Chamber member, said Mike Stock, QualChoice’s chief financial officer.

Currently more than 500 employees are in the plan, Stock said.

“We’ve seen a steady growth of enrollments every month,” he said.

Stock also said the introduction of health savings accounts might reduce the number of uninsured.

While employees using health savings accounts face higher deductibles, the accounts offer protection against catastrophic situations, he said.

“Premium increases have slowed somewhat, but there’s little confidence out there that we have an answer to health care cost growth,” Jon Gabel, co-author of a study of health insurance costs for the Kaiser Family Foundation of Washington, D.C., said in a September news release. “In the mid-1990s, premium hikes dropped to less than 1 percent, and we’re still far away from that right now.”

Hospitals

Patients without insurance ran up hospital bills of $354 million in Arkansas in 2003, up from $168 million in 2000.

“It certainly has a financial impact on hospitals,” said Paul Cunningham, senior vice president of the Arkansas Hospital Association.

People without health insurance usually wait until the last minute to seek medical care. They then show up at a hospital’s emergency room, where it’s more expensive and less effective to treat the symptoms.

In 2000, 20,500 people without health insurance were admitted to Arkansas hospitals. In 2003, the most recent year for which data was available, the number jumped to 30,050, an increase of 46.6 percent.

Charity care and bad debt for hospitals totaled $390 million in 2000, and by 2003, it was $475 million.

“There is a trend of not only the number of patients that are coming into the hospital that don’t have a source of payment but also in the total cost of providing care too,” Cunningham said.

Hospitals don’t have many options in trying to slow the number of uninsured patients coming through their doors.

“Anybody that comes into the hospital — particularly the emergency room — the hospital has to do the appropriate medical screening and stabilize that patient or transfer him,” he said.

Costs

The Arkansas Center for Health Improvement, an independent health policy center whose mission is to improve the health of Arkansans, is trying to find reasons why some are left without health insurance.

The issue, Ryan said, is “very complex.”

“The bottom line answer for many employers is costs,” he said.

In 2005, health insurance premiums increased an average of 9.2 percent, down from the 11.2 percent average in 2004, according to the “2005 Annual Employer Health Benefits Survey” by the Kaiser Family Foundation and the Health Research & Educational Trust of Chicago.

The 2005 increase halted four consecutive years of double-digit increases, but the rate of growth is still more than three times the increase in workers’ earnings, the report said.

Part of the reason for the rise, Ryan said, was the shifting of the cost of providing care to the uninsured. Providers try to recover those costs by demanding higher rates from the insurance companies, said Stack, QualChoice’s CFO.

“So the people who are insured end up picking up the cost of the uninsured,” he said.

Ryan said the rising cost of health insurance also is tied to the technological advancements in care and drugs. And the overall poor health of Arkansans also impacts the rates, he said.

The Kaiser report also found that the share of companies that offer coverage dropped from 69 percent in 2000 to 60 percent in 2005.

“It is low-wage workers who are being hurt the most by the steady drip, drip, drip of coverage draining out of the employer based health insurance system,” Drew Altman, Kaiser Family Foundation president and CEO, said in a September news release.

The annual premiums for family coverage reached $10,880 in 2005, the Kaiser report found. Workers paid an average of $2,713 toward premiums for family coverage in 2005, nearly $1,100 more than they paid in 2000.

“Employers have told us pretty consistently that they want to be able to offer health insurance coverage as a benefit,” Ryan said. But they can’t afford it, so employers stop offering coverage or start limiting benefits, he said.

Max Heuer, a spokeswoman for Arkansas Blue Cross and Blue Shield, said she’s seen reports that show a large number of the uninsured can afford to purchase insurance but choose not to.

“A lot of attention has been trying to educate that population as to why it is important for them to have insurance,” Heuer said.

Arkansas Blue Cross and Blue Shield has directed marketing campaigns to reach the young and the healthy who don’t understand why it’s critical for them to have insurance, Heuer said.

Ryan said his group’s studies have shown that people want health insurance.

“Arkansans really understand the importance of having health insurance,” he said. “They can’t get it because it’s not available or not affordable.”