DHS Calculates $670 Million In Health Savings Over Decade

New numbers released from the Department of Human Services indicate the private insurance option being considered by lawmakers could save the state $670 million over the next decade.

On Wednesday, DHS released actuarial figures that show the private option would save an estimated $30.7 million in FY 2014, $151.3 million in FY 2015, and $176.4 million in FY 2016.

Those three years account for the federal government’s 100% commitment to fund Medicaid expansion, which Arkansas lawmakers have received permission to shift into subsidized health insurance plans  for low-income workers in a forthcoming insurance exchange.

After year three, the state of Arkansas must gradually pick up the tab for a portion of the Medicaid expansion dollars, eventually a 10% cost-share by FY 2023.

Still according to DHS calculations, the state would save more than $341 million during the next four years following FY 2016 as federal money would outweigh state costs. By FY 2021, the trend would reverse as the state would be on the hook for $8.8 million, according to the actuarial analysis, followed by $9.9 million in FY 2022 and $10.8 million in FY 2023.

Last week, DHS officials said the Arkansas private option plan could add less than 15% to costs as opposed to a straight Medicaid expansion, but it could also result in negligible additional expenses when combined with other factors.

On Wednesday, Talk Business Arkansas executive editor Roby Brock sat down with Ray Hanley, a former state Medicaid director who is chairman of the AR Health + Jobs coalition. Hanley said the private option is the best political deal available and said he expects the move to offer higher reimbursement rates, which will help rural hospitals and health care providers.

He also said that by adding as many as 250,000 new Arkansans to health insurance rolls, it is likely to cause an increase in premiums due to more people accessing the health care system. However, Hanley contends that younger, healthier, lower-wage workers who may participate in the exchanges could help offset those premium costs.

Watch his full interview below.