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Wednesday, March 13, 2013

Kaiser releases report on Medicaid and premium support

Posted By on Wed, Mar 13, 2013 at 2:07 PM

The Kaiser Foundation released an overview this morning on Medicaid and premium assistance. Lots to digest if you're feeling wonky, but let's quickly highlight their findings that are relevant to the Arkansas "private option."

• Under the 1905(a) rule that Arkansas would use, all Medicaid provisions in terms of benefits and cost-sharing protections remain in place. This is extremely important and could be a sticking point with local Republican lawmakers, who have designs on asking for even more "flexibility." The only way out is a waiver, which doesn't seem likely. The Incidental Economist site had a good post yesterday on the possibility of HHS deciding they'd already gone too far and "walking back" from the "private option" offer if cost concerns grew too steep. But it's also possible that GOP lawmakers will walk away if they don't get all of their demands. Sen. David Sanders has told me repeatedly that they are "shooting for the moon." Hard to imagine that Republicans would screw over insurance companies and providers over a few details, but remember, these guys are true believers.

• One of the biggest challenges for past uses of premium assistance? A difficulty that is getting worse, not better? I bet you can guess! "One key challenge identified by state administrators is achieving cost effectiveness." (For various reasons, the Arkansas setup will be even more challenging, and depending on what you mean by comparable in cost, probably impossible.)

• About that comparability issue, the cost effectiveness test for other forms of premium assistance is likely unrealistic for the Arkansas "private option": "states must establish that the cost of covering an individual through premium assistance is the same or less than covering the individual in the direct Medicaid or CHIP program." Kaiser notes that the 1905(a) option "does not include a statutory reference to cost effectiveness, however recent regulatory guidance....includes a cost effectiveness definition similar to the statutory definition above." Uh oh!

• This is the big one and it's not going away. As framed by Kaiser, the "key question is whether the purchase of exchange coverage will prove cost effective since exchange coverage is expected to be more expensive than Medicaid."

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