John Burris: Redetermination Is Good Policy, If Executed Properly

Our state has finally begun a process called “redetermination,” which means re-verifying income levels for enrollees in benefit programs like ARKids and the Private Option.

Thousands will be deemed ineligible for what they’re currently receiving. It’s the right thing to do – if executed properly – and should have been started long ago.

What the results mean, though, as well as the actual effect, might not be what some expect. The process provides a good contrast for two government programs and how they operate very differently.

ARKids is probably most in need of robust redetermination. In 2013, the Legislature required income levels to be verified for enrollment. Senator Jonathan Dismang and I were sponsors of the bill. We were motivated because we had seen ARKids enrollment lists that included children of state employees who made more than six figures. It wasn’t a hypothetical problem.

The program is supposed to cover children of parents who earn less than 200% of the federal poverty line (FPL). The state had previously waived all requirements to verify the income people were self-declaring. So if enrollees said they earned 199% of FPL, they qualified. If they said they earned 201% of FPL, they didn’t.

It was a free-for-all with massive incentives for misrepresenting income levels since there was no verification, hard cut-offs for enrollment, and a benefit plan more lucrative than the typical private commercial plan. People will always exploit what the government encourages or allows.

After redetermination, those who are ineligible will be forced to exit the government-managed program and enter the private market. In a program where you’re either “on” or “off,” those who make too much should be kicked off.

Then there is the Private Option, where enrollment, at the time of this writing, stood around 220,000. It was closer to 250,000 only one week ago. Governor Asa Hutchinson has ordered the redetermination purge to begin with this program, and a short ten-day response window has contributed to more than 30,000 cancellations.

The governor probably just believes the rolls should be kept current, and he’s right about that.

But the end result of redetermination on this population will be very different than the one coming with ARKids, and in reality it confirms a main principle behind a premium assistance model.

Unlike ARKids, where an enrollee will move completely off the government program and onto a private sector plan (saving the state its 30% share of the cost), an enrollee who is kicked off the Private Option will simply bump up the “subsidy ladder” of the healthcare exchange.

They’ll purchase virtually the same type of plan, subsidized with the same federal dollars. Their cost-sharing might scale up a small fraction or their share of the premium could increase a small percentage, but the differences are minimal, and intentionally so.

A goal of the Private Option was to create a smooth ladder of mobility that does not dis-incentivize increased incomes, like ARKids does. Here, the enrollee will see little to no change. They might see an initial disruption caused by the compressed timeline for renewal.

That timeline, ordered by DHS, is simply politically-natured eagerness to overcompensate for failure to implement a successful redetermination process sooner.

Redetermination is good policy. But it’s disastrous if the state doesn’t have the ability to process the very thing it demanded. There’s great opportunity for chaos in an operation so large yet so basic (DHS is mailing standard letters to 18-month old addresses). Let’s hope chaos doesn’t happen, for the sake of people who would suffer.

The Private Option intended to privatize healthcare for working adults, rather than foster reliance on a system that’s government-managed. Now, the state government might be mismanaging the only area of the program they were responsible for. It’s like buying a new car, but then the Revenue Office messes up the paperwork. Don’t blame the car.

When the short-term story of redeterminations passes and DHS becomes efficient at processing paperwork, there’s a more significant conclusion worth considering.

The only reason an enrollee would now be deemed ineligible is because they have earned more money since they first enrolled, crossing over the 138% FPL marker that makes them a technical Private Option enrollee. It tells us that they didn’t stop working just because they received an insurance subsidy. They kept climbing.

That was always the goal. There’s no reason a person making less than 138% FPL deserved Medicaid, but a person making over it deserved private insurance. Now, there’s a steady ladder of insurance for working-aged adults rather than two different systems that have rough transition points and dis-incentives for upward mobility.

Maybe the ladder works after all, even if government can’t keep track of which rung is which.