Yes, the private option costs more. And, yes, there's a better option | Arkansas Blog

Tuesday, September 23, 2014

Yes, the private option costs more. And, yes, there's a better option

Posted By on Tue, Sep 23, 2014 at 10:49 AM

Ernest Dumas admits the awful truth — the "private option" version of Medicaid expansion dreamed up in Arkansas cost more than expansion of traditional Medicaid. That doesn't make it a bad thing, however.

But if you really want to save money, there's a much better option. A single option, you might say.

His column this week:
By Ernest Dumas

The enemies of Obamacare and Arkansas’s peculiar version of it, the “private option,” exposed what they hoped would be a dirty little secret the other day: The government spends more on the private option than it would have spent on plain-vanilla Medicaid, the undiluted Obamacare that other participating states follow.

That was not exactly what the Government Accountability Office set out to prove in a little report for Sen. Orrin Hatch (R-Utah) and Rep. Fred Upton (R-Mich.), inveterate foes of Obamacare (although Hatch and 18 other GOP senators signed on as sponsors of its blueprint in 1993), but it served their purpose. That was to create the impression that the much-ballyhooed Arkansas plan is more expensive for the government and the taxpayers than it needs to be.
Maybe it could even be the nudge that kills the private option next year when a new governor and a legislature with perhaps a diminished majority for the private option take a new look at it. Maybe it will help conservatives realize the goal of ending health coverage for some 225,000 poor Arkansans who until a year ago could not afford either insurance or medical care when they got sick.

Hatch’s and Upton’s big objective was to discourage other red states from following Arkansas and jumping into the Medicaid expansion. Look, they can say, the Arkansas plan is flawed and will have to be scrapped, so you don’t want to follow the lead of those treasonous Arkansas Republicans.

The Republican authors of the private option aren’t deterred by the GAO report, nor are Gov. Beebe, the officials who run the Medicaid program or all the providers around Arkansas who think Obamacare, including the private option, is the best single development for public health in the state’s history, except for the enactment of Medicare and Medicaid in 1965.

But here is the truth they don’t want to admit: that dirty little secret is right. The private option costs the government and the taxpayers more than merely enrolling those 225,000 poor grownups in Medicaid. That was obvious from the first, although the authors of the option produced a formula for justifying it that suggests that it would cost no more than straight Medicaid and maybe much less. They harbor undying faith that the market (insurance carriers) will always do things cheaper and better than the government—pay much more for all the medical procedures than do Medicaid and Medicare while keeping enough money for executive salaries, administrative overhead and promotion. The overwhelming evidence, at least in health care, is that it does not.

The rationale they offered for the private option is that if Medicaid got doctors and hospitals to take all those poor patients it would have to substantially increase its low reimbursement rates, and if people instead used the government’s money to buy private policies the government would reap heavy premium taxes from the companies. Also, Arkansas’s private option carves off the sickest and costliest people—the medically frail—and assigns them to Medicaid, a huge saving for the companies.

Medicaid hasn’t jacked up its reimbursement rates and who knows whether it would have if the state had implemented direct Medicaid? But the undeniable truth is that the expansion without the private option would not have been as successful so quickly in reaching so many Arkansans. Many people feel better about owning an insurance policy than accepting what they think of as welfare, and insurers, hospitals and doctors aided in signing people up for the better-paying insurance. Significantly, the heavy use of the private option drove down premiums for people in the private exchange.

If saving a bundle of taxpayer dollars is all that matters to Hatch, Upton and those who seize on the GAO report to say the private option must go, they logically ought to concede a larger point. A single-payer system of insurance like Medicaid and Medicare is the cheaper, more efficient way to go to guarantee access to health care for all Americans, which Republicans have always rejected, which is why we got the market-based systems of Romneycare and Obamacare.

Have you read all the recent conservative idolatry of Canada? It is the new free-market, low-tax, low-spending paradise whose policies our government should be emulating. It has a bigger safety net than the United States but a budget that is in better control and business-friendlier tax policies.

But there are good explanations for that beyond tax policy and a cheap currency. One is that Canada has a government-run single-payer health system similar to Medicaid that insures everyone, including visitors. There is a high quotient of happiness with it. Canada spends only 10.9 percent of its roaring GDP on health care, compared with our world-leading 18 percent.

“If you want to do spending austerity, single payer is a powerful tool,” David Frum, President George W. Bush’s speech writer and conservative commentator, said the other day. If that’s where Orrin Hatch and other critics of the private option and Obamacare want us to go, they’ll get no quarrel from this quarter. 

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