Sen. Jonathan Dismang: The Private Option Is Leading True Entitlement Reform

Editor’s note: An architect of the private option, Sen. Jonathan Dismang (R-Beebe) represents District 28 in the Arkansas State Senate.

The traditional Medicaid program has failed and as a result, the state and federal partnership is on an unsustainable path. When coupled with the dysfunction in Washington, this reality requires state leaders to take the lead in reform efforts necessary to salvage the system. This is a challenge that Arkansas legislators welcome.

In 2010, the United States Supreme Court upheld the Affordable Care Act and in its ruling allowed each state to dictate their level of participation in the federal Act’s Medicaid implementation. While the Court had little impact on the vast majority of the law’s provisions, including those that are especially harmful to rural states, it did create a small window with significant leverage potential. Absent this opening, Arkansas and the country would have been automatically blanketed with a broken, “one size fits all” federal Medicaid mandate. A program that has proven to exponentially increase government bureaucracy, stifle needed market competition, produce poor healthcare outcomes, limit patient access, and discourage responsible consumer behavior.

With the passage of the Health Care Independence Act of 2013, the Arkansas legislature has led the nation in utilizing the Supreme Court decision by forcing a federal-versus-state Medicaid “tug of war.” By employing conservative principles, the Arkansas act dismantles the traditional Medicaid structure and specifically addresses identified shortcomings. Despite popular national opinion that we would be unsuccessful in our negotiations, to date, the state has effectively leveraged its position to make unprecedented steps toward true entitlement reform.

The foundation of the Arkansas’ Health Care Independence Act is the utilization of premium price assistance. To summarize, instead of using Medicaid dollars to fund the old bureaucratic system, Arkansas will allow individuals to purchase private insurance and enjoy the benefits of competitive market forces. Conservative leaders have made similar attempts to privatize the system; however, no state has held the needed leverage to force federal approval of such a program.

The creation of the direct private payer and provider relationship decreases the state’s exposure to fraud, waste and abuse by reassigning the prevention controls to a more capable private entity. By shifting the management of operations to the participating carriers, the Arkansas act reduces existing government bureaucracy and creates a more predictable budgeting process. Additionally, this shift moves the negotiation of rates and pricing between two non-governmental entities, encouraging increased competition. The result is market driven, downward pressure on healthcare costs as a whole. Greater competition has the potential to not only control costs in the eligible population, but also to promote new competition in the private market and hold down increases caused by the mandates written into federal Affordable Care Act. With the success of insurers and providers depending on access for consumers, the markets will create points of entry that are currently non-existent.

The Arkansas Healthcare Independence Act uniquely recognizes the importance of consistent and effective primary care. By utilizing the patient-centered medical home model, physicians and insurance carriers will be rewarded for working jointly to reduce costs and improve long-term outcomes. Tied to better care management, consumer cost sharing in certain populations and non-coverage of improper usage will increase patient responsibility by encouraging proper healthcare utilization.

In 2015, our state will begin implementing a health savings account program in order to more directly allow participants to manage their healthcare needs. This program will create a sense of ownership on the part of the patient, who will be provided incentives that reward consumer responsibility, proper utilization, and personal healthcare awareness. This is in direct contrast with the existing system, under which a person could obtain free healthcare by not earning an income, but would lose that coverage by simply working a minimum wage job.

The Arkansas law eliminates the financial cliff for participants and removes existing barriers of personal betterment by creating a continuous ladder of support.

Our state’s focus on entitlement reform goes beyond the Healthcare Independence Act. By deploying a comprehensive package, the legislature has accomplished a significant number of additional reforms, which include the implementation of a robust verification system and the creation of a Medicaid Office of Inspector General. Without question, we are truly leading the country in entitlement reform by creating an atmosphere of dynamic federalism.

The current focus of discussion in our state capitol boils down to a fairly simple, but important question: Is real conservative reform worth the growth in eligible enrollees?

I believe in the long-term importance of Arkansas being the model for entitlement reform, while at the same time, I understand the concern of using increased coverage as our lever. I am proud to be part of a legislative body dedicated to objectively seeking information and respectfully deliberating issues facing our great state. The 2014 fiscal session promises to bring another productive and healthy discussion of the state’s current position and trajectory into the future.