Arkansas legislators hear about Private Option 2.0

Arkansas lawmakers heard Tuesday (June 17) about the next wave of Private Option concepts that will be debated as the program moves forward. The ideas include a version of Health Savings Accounts (HSAs), new cost-sharing measures, and a plan for non-emergency transportation needs for Private Option beneficiaries.

Arkansas’ Private Option takes federal Medicaid expansion dollars and uses it in private health insurance exchanges to subsidize low income workers’ health care coverage. The General Assembly passed the program in 2013 and renewed funding in 2014.

Last week, state officials said that over 187,000 Arkansans — roughly 75% of estimated users — have been determined eligible for the Private Option and just over 172,000 have completed enrollment.

Speaking to the Arkansas Health Insurance Marketplace Legislative Oversight Committee, state officials laid out their blueprints for implementing the three new components of the Private Option program. The concepts were part of the 2013 legislation passed to establish the Private Option, but the changes may not come online until 2015. Federal waiver requests and potential regulatory and legislative clearance will be required to start new aspects of the program.

Independence accounts are basically Health Savings Accounts, which will require Private Option enrollees to financially manage their health care participation. Lawmakers have been pushing for a “consumerism” approach to state-supported health care.

A second component discussed Tuesday centered on cost sharing, which would provide for Medicaid-eligible and Private Option enrollees to make small payments for health care services. The cost sharing mechanism, which will require a waiver from federal Medicaid officials, is expected to allow for an easier transition for Medicaid and Private Option participants to help pay for premiums as they become upwardly mobile with income.

Officials said that the cost sharing effort is also for participants to gain experience paying for health care at a point of service, understand personal responsibility, and accrue funds to help smooth their transition to private market plans when enrollees move out of the Private Option.

The third concept involved non-emergency transportation. When drafting the Private Option and in an effort to contain costs, lawmakers wanted a different rate of reimbursement for transportation for non-threatening medical conditions.

Legislators also heard from Cheryl Smith, the new executive director of the Health Insurance Marketplace (HIM), which oversees the state’s health insurance exchange. Smith said an exchange “at its core is a tool,” like a hammer.

“You can either smash a windshield with it or build something with it,” she said. “It’s neither good nor bad — it’s what you decide to do with it.”

Smith said that going forward the HIM would be “thoughtful, deliberative, methodical” in how to structure the insurance exchange of the future. The group is now looking at different state models and is about to embark on a major study of Arkansas’ needs. She said that a consulting group would be working with HIM to conduct focus groups, interviews, and a statewide survey.

The fate of the Private Option still remains in question, although supporters say there is plenty of data still to be received and additional policy changes to consider before next year’s legislative session.

During the 2015 session, lawmakers can make policy changes to the Private Option, and they will have to reconsider funding to the plan, which requires a 75% vote of support from both chambers of the legislature.

So far this year, the outcome of elections has boosted opponents and caused concern for supporters.

In the Arkansas State Senate, funding for the Private Option passed in this year’s fiscal session with no votes to spare. Two State Senate candidates who supported the Private Option were defeated in their primaries. Their opponents face no general election candidates causing many to predict that the Private Option is two votes shy of passage in the 35-member Senate chamber.