Sen. Sanders: Lower Rate Filings Evidence Of Private Option’s Worth

The lower than expected 2015 insurance rate filings inadvertently published on the Arkansas Insurance Department’s Rate Review Division website provide evidence that the private option is working, one of the program’s chief architects said Monday.

The rates for the Arkansas Health Insurance Marketplace were accidentally posted last week and then removed. David Ramsey with the Arkansas Times first reported the story.

According to the Arkansas Times, Arkansas Blue Cross Blue Shield is proposing no rate increase; Celtic, which is offering insurance in Arkansas as Ambetter, offered a rate decrease of 12%, while QualChoice is proposing an increase of 5%. Blue Cross’ filing is being reviewed by the Arkansas Insurance Department, while the others have been reviewed and sent to the federal government. The multi-state Blue Cross Blue Shield plan is the responsibility of the federal Office of Personnel Management, Ramsey reported.

Insurance Department spokesman Seth Blomeley would not confirm that those rate filings were accurate. However, he did write in an email, “We are exploring releasing the rate information sooner than we had planned in the interest of transparency and accuracy.” He said rate filings will be approved by the federal government at least by November.

The Times reported that, based on the 2014 market shares of the three carriers, the requests would represent a net decrease of 3.5%.

The Affordable Care Act, also known as Obamacare, established state and federal exchanges including the Marketplace to provide an avenue for individuals to purchase subsidized health insurance based on income.

Another provision of the Affordable Care Act required that states expand Medicaid, but the U.S. Supreme Court ruled that states must be given the option of whether or not to do that. In response, Arkansas legislators created a hybrid approach using those federal dollars to buy private health insurance on the exchange, a policy known as the “private option.”

Sen. David Sanders, R-Little Rock, an architect of the private option, was asked Monday if the private option is responsible for the proposed rate filings. “Of course it is,” he said.

“The private option has created for the state of Arkansas a pool of individuals who are healthy, young, most of whom work, and as we know, actuarial realities matter,” he said.

The private option had enrolled 163,480 as of July 31, plus another 20,355 who started the enrollment process but were transferred to traditional Medicaid because of chronic health problems. That means the insurance pool is receiving an infusion of young and healthy participants, adding revenues through insurance premiums without costing as much.

Of course, that means the less healthy recipients are being funneled into Medicaid, adding to its costs. Sanders said that was not a problem because Medicaid was meant to serve the disabled. People who are poor simply need health coverage.

“Poverty is not a disability,” he said. “Poverty is a condition that you’re in, but one that you can escape.”

Sanders pointed to other states that have followed Arkansas’ lead, including Iowa, which has already instituted its version of the private option, and New Hampshire, Utah and Indiana, which are in various stages of potentially implementing their own programs.

Critics of the private option point to its uncertain future costs. It is expected to require $47 million from the state in fiscal year 2015, when the feds are paying for practically all of the costs. It will cost the state $275 million starting in fiscal year 2020, when Arkansas will be responsible for 10%. Because of the additional federal revenues and the reduction in uncompensated care, the state is expected to gain $670 million over 10 years. The cost to the federal budget, on the other hand, is expected to be $1.59 billion in fiscal year 2015 and $2.35 billion in fiscal year 2020.

“If they gave you and me a $1.5 billion Obamacare credit card, we could get some good news out of it for a while,” Sen. Bryan King, R-Berryville, told Talk Business & Politics in an earlier interview. He later added, “We’ve turned into Washington, D.C., where today’s solutions are paid for by future generations.”