Arkansas is the perfect place to try out this new health trend. Read all about the what, why, where and how here.
Maybe only because it has been six months since the last TV commercials and newspaper ads brandished Frank Luntz's poll-tested slogan "government takeover of health care" national health insurance is enjoying a modest rebound.
Even in Arkansas, where a massive ad blitz to influence Arkansas's pivotal congressional delegation turned the popular idea of universal health insurance into an abomination, the Patient Protection and Affordable Care Act of 2010 is gaining acceptance, sometimes verging on enthusiasm. Arkansas hospitals look forward to its full implementation in four years, when much of their charitable write-offs and cost shifting will end. The medical profession, which once viewed any move toward expanded coverage as socialism and a loss of control over medical decisions, largely favors the new law.
The state government, which must administer big parts of the law, has plunged into the details since its enactment in March and found much that it welcomes, including a huge infusion of cash into the Arkansas economy and even some relief for the severely stressed state budget.
Far from bankrupting the state when Medicaid is expanded to cover poor adults in 2014, as some state officials worried during the furious final deliberations over the bill in the late winter, the law should ease state budget problems until late in the decade, when the state will begin to kick in a small match for billions of dollars in federal assistance for medical treatment and hospital care for low-income adults. Meantime, under an unpublicized provision of the new law, the federal government will pick up nearly the full cost of the original ARKids First, the expanded government-insurance program for children that Gov. Mike Huckabee always proclaimed to be his proudest achievement. Mike Beebe, a state senator in 1997, sponsored the bill that expanded government coverage for children of low-income families.
Governor Beebe said immediately after the Affordable Care Act's passage that he probably would have voted against it had he been in Congress because he feared that it could increase demands on a state budget that was already stressed. He wouldn't say the other day whether he has changed his mind — "water under the bridge," he said — but he acknowledged that the law could produce some dividends for the state government as well as the public. He still is concerned that a sharply expanded Medicaid program will put a significant burden on the state, even if it is eight or nine years away.
"It would be easy for me to say that it will be fine until 2017 or later since I won't be here," Beebe said. "I may not be here next January and for sure I won't be here in 2017. But I have a responsibility to look at the impact things will have long after I leave."
"To be fair," he continued, "the counter argument is that all that federal assistance for health services will produce additional tax revenues because of the increased income for providers." A study of the Medicaid provisions last month concluded that more than $12 billion could be pumped into Arkansas's health-care system in the six years after the law's major provisions are implemented.
If the Affordable Care Act succeeds in insuring nearly everyone — Arkansas is going to administer it better than Washington or anyone else in the country, Beebe promised — then it should reduce uncompensated care and the shifting of costs for indigent care to insured and paying customers and the taxpayers.
When nearly everyone is insured, through Medicaid, one of the other government insurance programs or private insurance, unreimbursed care at hospitals and other providers should be curtailed and that will benefit both state government and people who are currently insured because those costs will not be passed along to them.
"I chaired a hospital board for 10 years," Beebe said. "I know what uncompensated care does. I know they say they don't shift costs, but they do. If you don't cost shift, you're going to be out of business."
Seniors, who according to polls turned heavily against health reform last year owing to reports that they would lose Medicare coverage or see higher co-pays, have been discovering that it wasn't true. The law expands rather than shrinks Medicare benefits. For instance, starting the first of the year Medicare will waive the deductible and co-insurance charges for screenings and other preventive benefits and all 506,000 Arkansas enrollees will be able to get a free annual wellness visit.
The American Association of Retired Persons (AARP), Families USA, a national nonprofit organization that promotes good, affordable health care for everyone, and ministerial groups in many communities have worked to educate people on what the law does and does not do.
The law's timetable — its numerous provisions will be phased in over 10 years — helps reverse the antipathy. Almost immediately a few of the most popular benefits that are not linked to other provisions of the law kick in. By the end of the year, some 45,000 elderly and disabled Medicare enrollees in Arkansas will get $250 checks to help them pay for medicine after they fall into "the doughnut hole." The checks began arriving in mid-June for those with such unusually high drug bills that they had already fallen into the gap. The law that expanded Medicare to cover seniors' drug costs, which Congress passed in 2003, provides that after the first $2,830 of a person's prescription-drug costs each year an enrollee must pay 100 percent of his drug bills until $4,550 has been spent. Some 175,000 Arkansans, about 35 percent of Medicare enrollees, hit the doughnut hole each year and many stop taking medicine. The government has provided a little help for the very poor but not those with modest incomes.
When people get the $250 rebates they are also promised more relief in coming years in the form of mandated discounts on prescriptions when they reach the coverage gap until the gap is finally phased out in 2020.
On June 1 the government began to pick up 80 percent of the cost of health insurance for employers when workers have to retire before the age of 65, when they become eligible for Medicare.
By fall, thousands of Arkansans will profit from other relatively minor reforms. Insurance companies must allow young people to stay on their parents' policies until the age of 26. Arkansas insurers have agreed to start doing that immediately. For a Little Rock educator it came at exactly the right time. His son, who exhausted his COBRA eligibility and has a congenital illness that might prevent his getting private coverage, went back on his father's employer policy in June.
In September, insurance companies will no longer be able to cancel people's policies when they get sick, deny coverage to children who have pre-existing conditions or impose lifetime caps on coverage, three of the most common complaints about health insurance.
Within a few weeks, the state Insurance Department will set up a new high-risk pool, subsidized by federal dollars under the new health law, for people who have been denied insurance because of pre-existing conditions. Arkansas has operated a high-risk pool for years but the premiums are so high — up to $1,100 a month for each person — and the coverage so sparse that only some 3,000 people, all with high incomes, participate. The federal subsidy, which will be whatever $46 million can be spread around to provide for each individual, will tide people over until 2014, when insurance companies will have to let them subscribe to regular health plans.
Jay Bradford, the state insurance commissioner, said the $46 million had to stretch for 3 ½ years, until Jan. 1, 2014, "which is when the bleeding will stop and insurance companies must cover them." Governor Beebe said he did not want the state budget compromised by implementing any part of the patient-care act so Bradford has to make an educated guess at how many people will buy the insurance at any subsidy level so that the state does not have to cut people off or use state dollars to continue the coverage until 2014.
The plunge in support for sweeping health-care reform in the spring and summer of 2009 was peculiarly ironic for Arkansas, which by almost any measurement enjoyed poorer health and lower access to health services than nearly every state and will get more relief from comprehensive reform.
Dr. Joe Thompson, the Arkansas surgeon general and the chief health policy adviser first to Gov. Mike Huckabee and now Governor Beebe, said the Affordable Care Act, while it has failings, came out remarkably well, particularly for Arkansas, given the conditions under which Congress had to act.
"We didn't have a stable system," he said. "We were headed for a crisis, a collapse. The average cost of a family policy in Arkansas in 2000 was $6,000 but by 2007 it had reached $11,500 and there had been no improvement in care or services. The politicians had to operate in that framework, knowing the looming crisis but also the hysteria on the other side."
"The act differentially advantages Arkansas more than most states because we have so many poor people and so many people — 500,000 and probably more — who are without health insurance."
Thompson said the law would propel many desirable reforms in the Arkansas health-care system while also adding in immeasurable ways to some of its problems or at least not helping solve those problems, including a shortage of general practitioners.
It should be an economic boon in one way, he said. Hospital and medical bills are the No. 1 cause of bankruptcies. The massive amount of federal assistance and the insurance that will be available to nearly everyone will greatly relieve that problem late in the decade.
Before the debate on national health insurance began in the spring of 2009, big majorities of Arkansans favored universal coverage of some kind, including a form of public insurance like Medicare for all. In the big public-relations battle that followed, the most relentless and expensive in history, the opponents of health reform won convincingly. Senator Lincoln's decisive position in the congressional struggle made Arkansas the crucible and attracted a blizzard of TV and newspaper ads disparaging the reform efforts in Congress. By fall, polls showed that most Arkansans opposed the legislation.
In April 2009, Dr. Frank Luntz, the Republican PR consultant, gave congressional Republicans and other opponents of a comprehensive health law their marching strategy. Luntz, author of the best-selling book, "Words That Work: It's Not What You Say, It's What People Hear," had come up with the phrase "death tax" in 1993 to describe the 90-year-old tax on great inheritances, and those words dramatically changed public attitudes and enabled Republicans, with Democratic help, to phase out the estate tax in 2001. The estate tax went out of existence this year.
Luntz advised Republicans that no matter what Congress produced they should describe the legislation as "government takeover of healthcare" or "Washington takeover of healthcare" and that they should constantly refer to Washington bureaucrats making decisions about the treatment that people could get. They should say that medical professionals and patients would no longer be in charge, that Washington would ration care and that there would be long delays in people getting the treatment they needed. Focus groups showed that those words alarmed people.
The other poll-tested strategies were that health reform would add to the national deficits and that Medicare benefits would be lost.
None of those things would describe the act that eventually passed — its central features were proposed by President Richard Nixon and the Republican congressional leadership in 1974 — but the phrases were shouted at town-hall meetings conducted by Arkansas congressmen and senators and they still appear regularly in letters that swarm the editorial pages of newspapers.
The evidence of acceptance and occasional excitement about the law does not suggest that it is yet popular, though like Social Security and Medicare it probably will become so. While the fury from Republicans, tea partiers and other critics that greeted its passage in March has subsided, Republicans still believe there is hay to be made this fall on the health law. U.S. Rep. John Boozman, the Republican candidate for the U. S. Senate, has criticized Sen. Blanche Lincoln on that single issue — her deciding vote for the act, which she helped draft as a member of the Senate Finance Committee. Lincoln has dithered between half apologizing for the law and proudly proclaiming her authorship and crucial vote. But she brags about only one feature of the law, the tax breaks for small businesses that provide insurance for their workers. Businesses with 25 or fewer employees can get tax credits of up to 35 percent of the amount they contribute to workers' premiums.
Jim Keet has tried to make the health law the fulcrum in his long-shot race against Governor Beebe although Beebe had said that he probably would have voted against it and he shows only a trifle more enthusiasm about it now that he knows more about the demands that the law will impose on the state.
Beebe's concerns in March were mainly about Medicaid, although he said he was disappointed that the law did not do more to drive down medical costs. One of the two steps that the law takes to insure everyone is an expansion of Medicaid, the state-federal insurance program for indigents. Starting Jan. 1, 2014, it will cover everyone with family incomes up to 133 percent of the federal poverty line. (The other big reform is to require employers with 50 or more workers to offer group coverage to their workers and require most individuals who do not carry insurance to buy it, with federal help if their family incomes fall below 400 percent of the poverty line. States or the federal government will set up exchanges where businesses and individuals can purchase private plans far more cheaply than they can now.)
Arkansas has one of the best Medicaid matching ratios in the country because of its high poverty rate, but the state still puts up a little more than a dollar for every four dollars of federal aid. Richer states like New York and Massachusetts match federal aid dollar for dollar. Arkansas's match, however, will not apply to the expansion under the Affordable Care Act. For the first three years, until 2017, Washington will pay 100 percent of the cost of covering adults up to 133 percent of poverty. The Kaiser Family Foundation estimates that 234,000 Arkansans could be added to the Medicaid rolls if the state makes an aggressive effort to enroll people, as the state Medicaid director says he expects the state to do. Starting in 2017, states will start picking up a portion of the costs until 2020, when they will shoulder 10 percent permanently.
So, from 2013 through 2016, if the Kaiser Foundation's projections are credible, the federal government will pump $6 billion into Arkansas for health-care services for the poor at no cost to the state budget. In addition to the improved well-being of an eighth of the population, that cash will be quite a stimulus for the state's economy.
No state will be helped more by the Medicaid expansion to cover low-income adults. Arkansas does better than many states insuring poor children through the ARKids First program, but all the other 49 states and the District of Columbia do more for poor adults. Only non-pregnant parents whose incomes are below 17 percent of the poverty line are eligible for Medicaid in Arkansas while every other state matches federal aid for adults at a much higher threshold, several at 150 percent or more of poverty. The federal government will begin to pay 100 percent of the cost in Arkansas of treating people up to 133 percent of the poverty line, people who in other states are already covered partially by state dollars.
Meantime, starting Oct. 15, 2015, the federal government will pick up almost the full cost of the "B" phase of the ARKids First program, which insures some 70,000 children with family incomes above the poverty line. That will relieve the state of appropriations of more than $16 million at 2008 levels and much more if the state expands the program as the legislature and Governor Beebe planned before the budget crisis intensified.
But the state will have to budget some cash for the adult program starting in 2017: 5 percent of the costs that year, 6 percent in 2018, 7 percent in 2019 and 10 percent from 2020 and afterward.
The Kaiser study projected that with a standard effort at enrolling people Arkansas would spend $455 million over the first six years of the law to match $9.4 billion in federal aid. With an aggressive effort, the state would spend $761 million and the federal government $11.5 billion.
Much of the money would go to hospitals, including the University of Arkansas for Medical Sciences and the Arkansas Children's Hospital, which should sharply reduce or eliminate the appropriations that the state makes annually to those institutions to offset uncompensated care. UAMS last year recorded $173 million of uncompensated care, treatment for people who were not insured and could not pay.
All Arkansas hospitals amassed nearly $1 billion in charges for uncompensated care in 2007, by which time they had accumulated a total of $8.2 billion in uncollected bills, according to figures of the American Hospital Association. The Medicaid expansion and the mandated employer and individual insurance that will begin in 2014 could come close to eliminating those write-offs.
"We supported the Senate bill [the Affordable Care Act] for a lot of reasons," said Phil Matthews, executive director of the Arkansas Hospital Association. "There were a lot of things, including coverage for people with pre-existing conditions, that seemed to be the right things to do. The number of people without coverage has been increasing at such a rate that hospitals cannot absorb the increasing losses from uncompensated care that the lack of insurance produces. As we go down the road now, hospitals should be better off."
Gene Gessow, the state Medicaid director, said the Affordable Care Act, especially its Medicaid provisions, would be good for Arkansas.
"It's a good deal for Arkansas that we're going to be providing access to health care for several hundred thousand Arkansans who are not now insured, and we're going to be doing it for three years with 100 percent federal dollars and for three years after that with a modestly rising state share," he said. "Even when it is fully phased in, the state will be able to purchase health care at a dime on the dollar. Do I think that's a good deal? Yes, I do."
"Putting nine to 12 billion dollars into the health system over six years cannot hurt the economy of Arkansas. It will leave more money in the pockets of people who are buying health insurance and delivering health care. That means their income on an after-tax basis will be higher. Is that better for the state economically? I would assume it is, if it is spent in Arkansas."
He said Beebe had directed the department, with or without the new federal law, to find ways to bend the health-care cost curve downward because health-care spending, not just Medicaid, was consuming a galloping share of the state budget.
A team of stakeholders has been working on that. While the Affordable Care Act, as Beebe and some other critics observe, does not do a lot to drive down health-care costs it proposes a big range of demonstration projects to test some cost-containment theories. Gessow said the Arkansas Medicaid program may undertake several of the pilot projects.
While the objections to the health legislation were sweeping and usually vague, such as "government takeover of health care," the attacks since its passage have been upon a single provision, the mandate that everyone who can afford it buy health insurance either individually or through their employment. A number of states, mainly those with Republican governors, are suing to block the mandate on the ground that the federal government has no constitutional authority to make states undertake such a mandatory insurance program.
It is Jim Keet's biggest beef with Governor Beebe. Beebe won't promise not to implement the law or to join the suit against the U. S. government. Keet says he likes some parts of the new law though he doesn't identify them.
More than 90 percent of Arkansas businesses with more than 50 full-employees provide group insurance plans now, though some of the plans may be so meager that they do not qualify.
Keet adopts the national Republican mantra that taxing businesses with more 50 or more employees that do not supply health insurance for their workers and bear at least half the cost will throw lots of people out of work.
Smaller businesses will not be subject to the penalty for failing to insure their employees although those with fewer than 25 employees can get tax credits for their contributions to employee health plans.
The employer and individual mandate is the key to whole reform. Without it, many people would avoid insurance and continue to shift the costs of their care to the insured and to taxpayers, and insurance companies could not feasibly be required to insure adults and children with pre-existing conditions and continue to insure people once they develop chronic illnesses like heart trouble and diabetes, at least without raising premiums sharply.
Dr. Thompson, the surgeon general, said the mandate was critical to the reforms but he worried that the insurance industry could be right that the penalties for employers and individuals are too weak to be very effective. People may choose to pay the penalty and search for insurance only when someone in the family gets seriously ill. The penalty for a person whose income is more than 133 percent of the poverty line and who does not acquire insurance will be only $95 the first year. The penalties will increase for businesses and individuals in succeeding years.
The exchanges will offer employers and individuals a menu of group plans. Each state can set up an exchange, join with nearby states or leave it to the federal government to run an exchange in the state.
Bradford, the insurance commissioner, said the state was waiting for federal regulations before proceeding, but he expected Arkansas to set up its own exchange.
"We can take care of our people a lot better than the feds will," he said. He and the rest of Beebe's policy team will recommend a plan to Beebe early next year. He expects to get more carriers to enter the Arkansas market. Now, Blue Cross Blue Shield has more than 70 percent of the insurance market in Arkansas.
Thompson said the new health-care regimen posed a couple of major challenges for the state. He thought that it would drive the state to abandon the fee-for-service system for paying physicians, hospitals and other providers. That will be wrenching, but a good thing, he said.
He predicted that a system of bundled payments would replace the system of paying each provider for each procedure or service. For instance, if a person has heart bypass surgery there will be a single value placed upon the treatment, and instead of the anesthesiologist, surgeon, hospital and other providers separately billing the patient's carrier there will be a single payment, which will be distributed among the providers.
Beebe said Thompson had persuaded him that the fee-for-service system was inefficient and expensive and a driver of health-care inflation.
The other challenge is meeting the increased demand for family doctors, who are already in short supply. Many people who have no insurance may still rely on hospital emergency rooms for family illnesses once they are insured, but the waiting rooms of general practitioners will become crowded when nearly everyone is insured. The state must produce far more family doctors, but it needed to do that without the federal law.
Medical schools have been graduating more students but most of them go into specialties where the compensation is higher and life less hectic. The American Medical Association a quarter-century ago produced a fee schedule ranking medical procedures by difficulty and degree of skill and training, and it put general practitioners and pediatricians at the bottom. The government and private insurance plans eventually adopted the schedule, which helped deplete the ranks of the country's most essential providers. The Affordable Care Act makes no direct effort to alter the compensation priorities.
It also makes no provision for supporting the training and replacement of non-physician clinicians, and Thompson said the state needed to amend its laws to allow them greater privileges and to train more of them. Clinicians could be the front line of basic care in rural areas of the state where general practitioners are few and far between. Arkansas is more restrictive than almost every state, a reflection of the power of the medical establishment at the Capitol.
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