"Private option" is good fiscal deal for state — just like Medicaid expansion was | Arkansas Blog

Monday, March 11, 2013

"Private option" is good fiscal deal for state — just like Medicaid expansion was

Posted By on Mon, Mar 11, 2013 at 9:33 AM

John Burris image
  • Rep. John Burris: private is just tastier than public

The new “private option” approach is going to cost a lot more money. I’ve explained at length why it’s still going to be a good deal for the state.

But here’s a very simple look, one that circles back to why expansion was a no-brainer deal for the state to begin with (was before, is now, but it takes the word "private" to sharpen some brains).

I estimate that using 2012 dollars, the gross cost of providing coverage via the “private option” will cost an additional $300-400 million per year than Medicaid expansion would have. That’s a lot! But remember, Arkansas gets a 100 percent match rate from the feds for the first three years, which gradually falls to a 90 percent match in 2021. So even years down the road, the extra hit to Arkansas is more like $30-40 million.

Still not chump change. But that federal spending is going to generate tax revenue. If the feds pour an extra $365 million into the state, we can conservatively estimate that might generate $14.6 million. That’s using a 4% rate that DHS used in their original cost study, which is probably too low but hey, we want to be conservative. (Yes, Republicans used to call this "funny money," but times change, people evolve.) Adding that to the new revenue stream from fees on insurance companies selling additional premiums on the exchange, and the switch from the old plan to the new could possibly be a wash for the state.

When you include everything—the various costs of expansion offset by the savings, not just from tax revenue but from state spending on uncompensated care and transfer populations moving to higher match rates—expansion is a money-saver for the state’s bottom line. Again, that was true before and it’s true under the new plan.

The main moral of the story is that if the feds offer 90-100 percent match rates on useful spending in your state, you should probably say yes. For whatever reason, it took the “private option” for Republicans to see the light.

From the ArkTimes store


Comments (7)

Showing 1-7 of 7

Add a comment

Subscribe to this thread:
Showing 1-7 of 7

Add a comment

More by David Ramsey

Readers also liked…

  • LR speakers blast state board for double standard

    A series of speakers, beginning with Sen. Joyce Elliott, denounced what they saw as a hidden agenda favoring charter schools at the state Department of Education and asked the state Board of Education for return of local control.
    • May 12, 2016
  • Two plead in fraud of sheriff's office

    A former employee of the Pulaski County sheriff and a North Little Rock woman who sold goods to the sheriff's office have pleaded guilty to mail fraud in a scheme to steal from the sheriff's office, according to a news release from the U.S. attorney's office.
    • May 16, 2017
  • Saturday's open line

    Got any thoughts? Put them here.
    • May 21, 2016

Most Shared

  • Industrial hemp pilot program coming soon to Arkansas

    One of the booths at this week's Ark-La-Tex Medical Cannabis Expo was hosted by the Arkansas Hemp Association, a trade group founded to promote and expand non-intoxicating industrial hemp as an agricultural crop in the state. AHA Vice President Jeremy Fisher said the first licenses to grow experimental plots of hemp in the state should be issued by the Arkansas State Plant Board next spring.

Most Recent Comments



© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation