State Senate Approves ‘Private Option’ Health Insurance Plan

On a 24-9 vote with two GOP lawmakers not voting, the Arkansas State Senate approved SB 1020, The Health Care Independence Act of 2013.  All 14 Democrats in the Senate voted for the measure, while Republicans split with 10 voting to support, 9 opposing and Sens. Bryan King (R-Green Forest) and Jason Rapert (R-Conway) not voting.  You can access the full vote here.

The bill provides the framework for utilizing federal Medicaid expansion funding and steering it into subsidies for low-income workers in a forthcoming health insurance exchange that is being constructed as part of the federal health care law.

Arkansas lawmakers, led by Republican members, and Gov. Mike Beebe (D) have negotiated a deal with the federal government to allow flexibility in developing a health insurance solution tailored to the state’s needs.

The state Department of Human Services is charged with securing federal waivers and approvals for the changes lawmakers want to see implemented. A recent DHS study showed that Arkansas could save as much as $670 million during the next decade under the “private option” plan.

WHAT THE BILL DOES
The measure, outlined in SB 1020, charges the Department of Human Services to:

• Maximize available service options
• Promote accountability, personal responsibility, and transparency;
• Encourage and reward healthy outcomes and responsible choices; and
• Promote efficiencies that will deliver value to taxpayers.

A provision of the bill requires DHS to promote insurance coverage in the exchange for children and parents currently utilizing the ARKids First program. Populations from 0% to 17% of the federal poverty level would be included. The program would also allow for cost-sharing in certain situations.

The bill requires the Insurance Department and DHS to promulgate rules for the new law, but mandates that they present the rules to the Legislative Council no less than 30 days before recommending.

There is an outline in the bill that also highlights a 120-day reduction in the insurance program if federal medical assistance percentages fall below certain thresholds, such as below 100% of funding in the first three years or below 90% in year 2020 or after.

As was previously reported, participants eligible in the private option plan must acknowledge that it is “not a perpetual federal or state right or guaranteed entitlement” and is subject to cancellation “upon appropriate notice.”

There is a provision in the newly amended bill to test a pilot program for health savings accounts or medical savings accounts during 2015.

In an effort to make pricing of the plans in the exchange competitive, the bill calls for at least two qualified health plans to be offered in each of Arkansas’ 75 counties. It requires those companies to participate in Gov. Beebe’s Payment Improvement Initiative, which has sought to bend the cost curve on Medicaid spending by shifting from a “fee for service” model to an “episodic care” model.

WHAT’S NEXT?
SB 1020 now heads to the House Public Health Committee, and if approved, to the full House of Representatives. While the bill needs a simple majority of votes to be enacted, it will also require an appropriation bill to allow for the federal money to be spent.

Appropriation bills require a three-fourths vote of both chambers of the General Assembly. That will be complicated to achieve as Republicans control both legislative chambers and many campaigned against the federal health care law.

House Speaker Davy Carter (R-Cabot) has emphasized that a vote for the private option is a vote against the federal law, often referred to as ObamaCare.

“The U.S. Congress gave us ObamaCare,” Carter told Talk Business earlier in the week. “The Arkansas legislature has led the fight against ObamaCare and turned a losing hand into a winning one. A vote for the private option in Arkansas is a vote against ObamaCare.”

Conservative opponents disagree and have made it clear that the private option plan does not sit well with their philosophy for health insurance reform.

“The Arkansas Scheme is just expansion by another name,” said Nicole Kaeding, State Policy Manager at Americans for Prosperity Foundation. An op-ed written by her is featured on the Americans for Prosperity Arkansas web site.

“It doesn’t matter if Medicaid is expanded under its traditional program or through a premium support model,” she said. “225,000 new Arkansans will be dependent on government for their health insurance. No matter how you spin it, it’s expansion, not reform.”