Consultants Compare Private Option To Other States

Arkansas, the state that first expanded the Medicaid population without expanding traditional Medicaid, can learn from states that have created their own versions of the private option, legislators were told Wednesday.

John Stephen, managing partner of The Stephen Group consulting firm, and Richard Kellogg, senior consultant, compared Arkansas’ private option to alternatives that have been enacted or proposed. The two testified before the Health Reform Legislative Task Force.

The private option was created from a provision expanding Medicaid in the Affordable Care Act that became optional after a U.S. Supreme Court decision affirming the act’s constitutionality. Many states refused the federal funding and did not expand their populations.

Arkansas instead used those Medicaid dollars to buy private insurance for households with incomes up to 138% of the federal poverty level. This year, the Legislature agreed to fund the program through the end of 2016 while creating the task force to consider changing the private option in the context of overall health care reform.

The task force earlier in the day heard a presentation from Gov. Asa Hutchinson, who offered a seven-plank plan for reforms.

The Stephen Group said that under the terms of the waiver Arkansas received to enact the private option, the program has no incentives to promote healthy behavior, no mandatory premium contributions and no employment-related programs. Its health savings account provision isn’t meaningful. There’s no co-payment for using the emergency room in non-emergencies, but recipients do have a co-payment for primary care physician visits, giving them an incentive to use the emergency room.

That’s an important issue considering that private option recipients are engaging in a higher percentage of repeat emergency room visits than the traditional Medicaid population. Kellogg said many private option recipients have not previously had insurance and must be taught how to use it. Also, emergency rooms need to be trained to connect non-emergent patients to primary care physicians.

The firm compared Arkansas’ program to ones in other states.

In Indiana and Michigan, households with incomes above 100% of the federal poverty line help pay for premiums, which is one of Hutchinson’s proposals.

In Indiana, they also pay up to a $25 co-payment for non-emergency use of the emergency room. In Pennsylvania and Iowa, they pay $8 if their household incomes are above 100% of the federal poverty level. In New Hampshire, unemployed recipients are referred to the state’s employment department, which is another of Hutchinson’s proposals. Arizona’s submitted proposal also includes a work requirement and a five-year time limit.

The Stephen Group told legislators that Arkansas’ Medicaid program is managing at least nine waivers from the federal government, including the one making the private option possible. To simplify things, legislators were encouraged to seek a single waiver for all programs, as Rhode Island has done.

Controlling the growth of the private option is critical, but more important is overall Medicaid spending. Legislators were told that the federal Centers for Medicare and Medicaid Services is projecting Medicaid will grow 5.9% per year from 2015 to 2024. If nothing changes with Medicaid, the state could have to spend $75 to $100 million in new revenue annually just to sustain the program.