Private option per-person costs flat in new year, now well below federal budget caps | Arkansas Blog

Tuesday, January 27, 2015

Private option per-person costs flat in new year, now well below federal budget caps

Posted By on Tue, Jan 27, 2015 at 5:10 PM

click to enlarge UNDER BUDGET IN 2015: Chart from DHS on private option costs and the budget neutrality cap. Note that the January 2015 figure does not include "wraparound" costs and will be around six bucks higher.
  • UNDER BUDGET IN 2015: Chart from DHS on private option costs and the budget neutrality cap. Note that the January 2015 figure does not include "wraparound" costs and will be around six bucks higher.

We mentioned in our preview post on the private option debate that new data would be coming in during the session. The Department of Human Services today released the first key development: As expected, the per-person, per-month costs of the private option appear to be flat in the new year. That’s good news — it means that for the month of January, the preliminary numbers look to be about $14 below the budget caps set by the federal government. That’s after the preliminary monthly costs were over the caps in 2014.

The per-person private option costs for January 2015 — which includes the cost of the premium as well as payments the private option makes to cover cost-sharing for beneficiaries – are about $480. That figure does not include the cost of “wraparound” services (services covered by the private option that aren’t included in the private plans, such as non-emergency medical transportation), which DHS won’t have until the end of the month. Historically, those have been around $6 per month, and there’s no reason to think this month will be different. So call it, approximately, $486.

That’s about what it was last month too. The difference is that most expected premiums to leap up this year. The “budget neutrality” caps that the feds set – the monthly per-person costs that Arkansas was not supposed to exceed as it conducted its “private option” experiment – went up by almost 5 percent between 2014 and 2015, anticipating that costs would go up. After all, that’s what health insurance premiums do, year after year — jump. Instead, premiums on the Health Insurance Marketplace were more or less flat (by weighted average, they actually went down). The per-person, per-month cap in 2014 was $477.63; the estimated per-person costs of the private option in December of 2014 was $485.84, over the cap. In 2015? The per-person, per-month cap is $500.08, which means the private option is around $14 under the cap for this January.

The terms of the waiver state that Arkansas would technically be on the hook for any total, cumulative amount above the caps, over the course of three years. In 2014, the state's average monthly per-person cost was around $490, about $13 over the cap (that adds up: multiplied by the number of beneficiaries each month, it's nearly $20 million). Though the state could have gotten the budget neutrality caps raised, state officials chose not to, perhaps partly wanting to avoid political pushback of a change to the budget. But the bigger reason that Arkansas left the caps alone is they were expecting this good news in 2015. Because the premiums were lower than expected, the private option looks like it will be in good shape to stay well under the caps this year. And remember, the accounting is cumulative – if the per-person costs are below the cap this year, it can make up for being above the cap last year. And because there are more people on the private option in 2015 than there were in 2014, this year will in practice count more than last year. In short, if news like this month’s continues, the chances of the state risking going over the caps and owing money back to the feds will fade away.

More broadly, as expected, relatively flat premiums have translated into relatively flat per-person costs for the private option. Those costs are still higher than the state’s actuaries predicted back in 2013 when the policy was being debated for the first time, but appear to be significantly lower than doomsday fears of rapidly escalating costs.

Another thing to keep in mind: Both the 2014 per-person costs and the 2015 per-person costs are estimates which will be revised based on the true costs of care. There is a good chance that the over-the-cap costs of last year will actually be revised downwards. Keep an eye out for information about medical loss ration and cost-sharing reductions (see here for more on what that means), likely to be released some time in the next few months. Today's data is good news for the private option's 2015 costs. The next big piece of data to look for: The private option might actually cost less than reports have indicated for last year too. 

Tags: , , , , , , ,

From the ArkTimes store

Favorite

Comments (6)

Showing 1-6 of 6

Add a comment

 
Subscribe to this thread:
Showing 1-6 of 6

Add a comment

More by David Ramsey

Readers also liked…

  • Judge Griffen: Why black lives matter

    Another few words from Judge Wendell Griffen growing from the controversy over the sale of Black Lives Matter T-shirts at the state black history museum — removed by the administration and restored after protests from Griffen and others stirred by a story in the Arkansas Times:
    • Mar 13, 2016
  • UPDATE: Hutchinson moves to cover himself on cut to War Memorial Stadium

    Gov. Asa Hutchinson apparently felt the burn from KARK's exclusive Tuesday night on his plans to cut state support of War Memorial Stadium in half beginning July 1, 2018. He has a so-far secret plan to make the stadium self-sustaining. We bet that doesn't include state support.
    • Oct 20, 2016
  • Judge anticipates punishment of lawyers in Fort Smith class action case

    Federal Judge P.K. Holmes of Fort Smith issued a 32-page ruling yesterday indicating he contemplates punishment of 16 lawyers who moved a class action lawsuit against an insurance company out of his court to a state court in Polk County after a settlement had been worked out.
    • Apr 15, 2016

People who saved…

Most Shared

Most Recent Comments

Blogroll

 

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