Rep. Joe Farrer: The Cruel Reality Of The ‘Private’ Option

Editor’s note: Rep. Joe Farrer (R-Austin) represents District 44 in the Arkansas House of Representatives.

Calling something affordable doesn’t make it so. If you call a dog a cat, it’s still a dog.

In the same way, calling Obamacare “The Affordable Care Act” or saying the “private option” will provide quality healthcare for low income Arkansans doesn’t mean it’s true. Neither of these programs will provide quality and both will cost much more than we’re being told.

The Arkansas legislature and the governor decided to expand Medicaid by giving people earning 0% to 138% of the Federal Poverty Level (FPL) private insurance. For a short time, this insurance will be paid for by the federal government. After three years, Arkansas will be responsible for 10% of the cost.

Arkansas is dependent on the young and healthy enrollees into the Obamacare health care exchanges. Just like nationally, Arkansas is having trouble getting people to enroll into the exchanges. Therefore, to improve the numbers, the Arkansas Insurance Department automatically enrolled SNAP (food stamp) welfare recipients into the private option, without verifying income of the people who are receiving this entitlement.

We face two basic questions with the “private option.”

One is, what is its overall effect on our health care? That is a question we really won’t know the answer to for years. Secondly, how much is this going to cost and how do we pay for it?

Arkansas is providing private health insurance for low-income citizens under the guidelines of Obamacare. These policies must have benefits mandated by Obamacare policy; prices vary depending on location and age of the person. Estimates of the number of private option enrollees range from 225,000 to 300,000. The current estimates for the Obama-mandated policies priced in the “private option” range from $200 to $1,300 per month.

In an effort to mask the real cost of the private option, the legislature and governor tried “new math” by moving the sick and frail to original Medicaid. Arkansas currently spends $6 billion a year on Medicaid. The mathematicians in the legislature say this increase in cost is paid 100% by the federal government. This is true, but only for a short time. What they don’t tell you is that Arkansas picks up 30% of the $6 billion Medicaid budget which is $1.9 billion dollars. With the private option, Arkansas is adding 25,000-30,000 more people to traditional Medicaid. So this new population will add another half a billion dollars to the state’s budget. Whether it is federal tax dollars or Arkansas tax dollars, the private option is a huge increase in spending without any way to pay for it either in the state or federal budget.

Furthermore, Arkansas will have no control over premium costs for the private option. If the cost-to-premium ratios increase, so will the premium costs, with no competition between insurance carriers. Arkansas will be at the mercy of the insurance carriers. To keep costs down, insurance carriers will have to decrease reimbursement for services from providers. With very few providers accepting Medicaid and Medicare now, and with Arkansas currently having a significant physician shortage, where will people go for care? Arkansans will experience very long waits and rationed care.

Proponents of the private option tell us that if the program fails, or if we decide we don’t like it after three years, it will just go away. But entitlements don’t go away and the governor’s office is already telling us the program can’t be stopped. Private option enrollees will be placed in traditional Medicaid, significantly increasing the cost to Arkansans. I believe this Medicaid expansion was the plan all along. The private option will fail and Arkansas will have expanded Medicaid.

Arkansas is a rural state; we are not New York or California. We currently rank 15th in the nation regarding our overall tax burden. We are 43rd nationally in education. Fifty percent of the state’s budget is spent on education. With the cost of the private option continually increasing, how will Arkansas pay for these increases? By raising taxes on working Arkansans or cutting spending on education? Will this further harm our ability to attract new businesses?

Can Arkansas depend on the federal government — that is currently over $17 trillion in debt – to continue to fund its health care experiment? Will Arkansas borrow money from China to subsidize its health care?

The legislature is now faced with a choice: will we continue to listen to the Mad Hatter and believe that everything will work out if we just follow him? Or will we work to put our state on a fiscally sustainable path and create a prosperous economy where folks can provide for themselves and their families?

It’s time for Arkansas to leave Wonderland and follow Alice back to the real world where more government spending only means higher taxes, higher prices, and less freedom.