UPDATE Medicaid game-changer | Arkansas Blog

Tuesday, February 26, 2013

UPDATE Medicaid game-changer

Posted By on Tue, Feb 26, 2013 at 5:07 PM

Mike Beebe image
  • Beebe: new plan could make legislators more comfortable

Gov. Mike Beebe met with about twenty lawmakers this afternoon to announce the results of his meeting with Sec. Kathleen Sebelius last Friday.

The feds have given Arkansas permission to pursue a plan that would provide private health insurance to anyone between 0-138 percent of the federal poverty level, giving coverage to more than 200,000 of the currently uninsured. The government would pay for the entirety of the premium, though consumers might be subject to some co-pays.

Beebe brought questions and ideas from legislators to his meeting with Sebelius and "basically they've agreed to give us about everything we've asked for," he said. "What that really amounts to is take the Medicaid population that would be expanded...and use those federal Medicaid dollars and purchase insurance through the exchange. So they would buy private insurance through the exchange for the entire population, and [the feds have] given us permission to do that."

This isn't "partial expansion." The full pool of folks that would gain coverage under full expansion of Medicaid would still get it. But Arkansas is the first state to publicly get a deal that accomplishes this not via the Medicaid program but via the exchange (Florida will be allowed to send some Medicaid recipients to private insurance through their managed care system).

Just as with Medicaid expansion, the feds would foot the entire bill for the first three years. Thereafter, the state would have to start kicking in a little bit, eventually settling at 10 percent in 2020. (Technically, these are Medicaid dollars, but they would be flowing to private companies and consumers would be interacting with private companies, not with the Medicaid program.)

Such a deal would potentially be a windfall for insurance companies, as well as hospitals, who would likely see higher reimbursements from private insurance on the exchange. For low-income citizens without health insurance, the deal would be similar to expansion, they would just get private insurance instead of Medicaid.

Gov. Beebe also announced that, prompted by strong support from House Speaker Davy Carter, the state will likely use the "sunset provision" idea from Florida, which would require the legislature to re-approve the deal in three years time, after the full federal match rates run out. States are already allowed to opt in or opt out at any time, but Beebe got approval from Sebelius on the sunset idea as well, just in case. Carter told reporters that a sunset was a prerequisite to any deal.

As for costs, buying private insurance for citizens is likely more expensive than providing Medicaid. That almost certainly means that this deal will have a higher price tag for the feds. And it could mean higher costs for Arkansas once the state has to start chipping in. Beebe acknowledged that possibility but said the sunset will allow lawmakers to analyze the question with hard data in three years time.

You're going to have a three-year period to assess that and determine that and then all options would be on the table in the fourth year. They might go back to full Medicaid instead of running it through an exchange. They may keep it as an exchange, they may decide not to do anything. That’s one of the things that would be available for a legislator and another governor to decide after the first three years….Starting in calendar year 2017, those all would be options on the table for the next policy makers to decide.

Beebe did not offer an opinion on whether this approach was better than simply expanding Medicaid. One way or the other, he believes accepting federal money to cover the uninsured is a good deal and his focus now is on closing the deal.

"My main objective is to make this legislature as comfortable as I can make them," he said. "With a three fourths vote requirement in both houses, that's a steep, steep burden....If the majority would prefer to go this way to get this done, I'm happy with that. If they want to go the other way, I live with that as well. The cost to the taxpayer for the first three years in the state of Arkansas is going to be the same."

Beebe said that for some legislators, subsidizing folks to buy private insurance was preferable to directly covering people through a government program for "philosophical" reasons.

So will this latest development sway a legislature that has been deeply skeptical of expansion? Beebe said that members reacted favorably to the news but it was too early to tell whether the deal would be able to secure the needed super-majority.

Senate President Pro Tem Michael Lamoureux thought the news was positive. "Basically they're not going to prevent us from doing what we think we need to do to make it work in Arkansas," he said.

Speaker Carter said that he thought the new potential plan was "better than the other choice...I’m very pleased that the governor took the concerns of my colleagues to the Secretary and got responses to let us know what we’re dealing with at this point. "

"This is a 180-degree turn from what we thought were the options just a few weeks ago," Carter said, adding that members seemed more open to cutting now a deal under these new terms. "In general I think there would be more support for private-pay plans than under the Medicaid coverage. That’s something that my colleagues were very much in favor of...Everyone in that room, to my knowledge, thought it was a move in the right direction."

Carter said that when he heard the news, he immediately sent a text message to his chief of staff to cancel the outside consultant legislators were about to hire to develop cost projections for Medicaid expansion "because it’s a whole new ballgame and those set of numbers are now not relevant."

Carter said that his focus now is on making sure that legislators receive procedural information and new cost projections as soon as possible, aiming to come to a resolution during the session and avoid a special session. "We're moving the ball down the field," he said.

As for the impact on the insurance exchange debate, Beebe said, "I told Sen. [Jason] Rapert and the other members, the flexibility that we're talking about here and the ability to be able to encourage certain behavior or discourage other behavior in the form of co-pays...could be seriously effected by us losing control of the exchange." Sen. Rapert has expressed concerns about the state-federal partnership for the exchange and has suggested that it would be better to back out and have the feds run it. Beebe favors moving to full state control in calendar year 2015.

Beebe said that he did not have concerns about the exchange logistically handling an influx of more than 200,000 additional consumers.

In fact, Department of Human Services Director John Selig speculated that things would actually run more smoothly. "The most difficult part of the exchange was going to be people going from Medicaid to private insurance, back and forth as they went up and down [the] income line," he said. "Now, you just keep [the private insurance company] as you go up or down. In a lot of ways this simplifies what happens on the exchange."

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