How the consultant hand-picked by private option foes might help save the private option | Arkansas Blog

Friday, December 11, 2015

How the consultant hand-picked by private option foes might help save the private option

Posted By on Fri, Dec 11, 2015 at 12:10 PM

Last week we published my interview with Rep. Charlie Collins, the co-chair of the Health Reform Legislative Task Force, which is charged with making recommendations for the future of the Medicaid program in Arkansas, including the private option (you can see the full Q & A here). 

Collins was surprisingly candid, I thought, about what he views as an inherent bias against the private option held by the Stephen Group, the consultant that the task force hired to help in developing a path forward. Collins said that he was worried up front that opposition to the coverage expansion would skew the group's findings (Collins and other leaders on the task force were so opposed to the choice that they initially tried to block the selection via another committee). And Collins said that even now, he still believed that the group was generally ideologically predisposed against the private option (certain aspects of the Stephen Group's report undersold the advantages of the private option, Collins argued). 

Whether or not that's true, it's certainly the case that the Stephen Group was the choice of the Tea Party types on the task force who were most vehemently opposed to the private option: Rep. Joe Farrer, Rep. David Meeks, Rep. Kim Hammer, Rep. Terry Rice, and Sen. John Cooper (the aginner wing was joined by the four Democrats on the task force in voting to select the Stephen Group; the Dems had their own idiosyncratic reasons, including fears that the other consultant choice might push for more managed care).  

Of course, in the end, the Stephen Group's recommendations suggest continuing the private option, albeit with the sorts of GOP-friendly tweaks that were inevitable to gather enough support in the legislature to continue the policy (and perhaps a new name!). Partly that's because the terms of the Stephen Group's contract, and requests from both the governor and legislators, ask for a plan that will maintain coverage for the hundreds of thousands of Arkansans dependent on the private option for health insurance. There just isn't a feasible and affordable way to do that without continuing to receive billions of federal Obamacare money via the Medicaid coverage expansion, whatever you want to call it. But it's also worth noting that many of the Stephen Group's findings make a strong fiscal and economic argument for continuing the coverage expansion, even aside from the fact that more than 200,000 Arkansans depend on it for their health insurance.

The big headline number: Stephen Group found that the private option would save the state budget more than $400 million between 2017 and 2021.  And it also found other benefits from the estimated $9 billion in federal money coming into the state because of the private option between 2017 and 2021. Some highlights:

* Savings on uncompensated care for hospitals: Between 2017 and 2021, hospitals are projected to save $1.1 billion because of the private option.

* State GDP: Between 2017 and 2021, the private option is projected to contribute $3.2 billion to the state GD 

* Jobs: The private option is projected to support more than 6,000 jobs during the 2017-2021 time period (6,500 jobs in 2017, up to almost 8,000 by 2021).

Collins noted, correctly, that the Stephen Group's focus on the years 2017 to 2021 doesn't take into account that the years that are most beneficial to the state — in 2015 and 2016, the private option is fully paid for by the feds, so the net impact on the state budget is even better. Collins argued that this would double the savings to the state budget that the Stephen Group estimated.

But in a way, that's precisely what makes the Stephen Group's findings so striking — even focusing exclusively on the costlier years, when critics of the private option argued that Arkansas would take a hit it can't afford, the state budget actually still comes out ahead on net. And here's another key nugget. The portion that the state has to pay will go up, eventually to 10 percent 2020 and beyond. But the Stephen Group found that, while net savings reduce as the state has to start chipping in more, the policy is still revenue positive in 2021, when it projects to save the state $25 million. In other words, the Stephen Group found that the policy would save the state money even in the out years, when the state will be picking up its full share of the tab. 

None of this is new. The savings to the state budget, the savings on uncompensated care for hospitals, the economic benefits to pouring billions of federal money into the state — all of that has been well established since this debate began more than three years ago, and backed up with empirical evidence since the policy was implemented in 2014. 

We've snickered sometimes, in this space, about the governor forming a task force, and the task force hiring a million-dollar consultant. After all, all of this stuff is well-trodden ground. It was already crystal clear that the only way to maintain coverage for more than 200,000 Arkansans was to continue the Obamacare-funded expansion. It was already crystal clear that the private option was a good fiscal deal for the state that reduced uncompensated care costs for hospitals and pumped federal money into the state economy. 

But it's one thing for me to say that. Folks like Farrer and Meeks and Cooper aren't going to believe the analysis in the Arkansas Times. And while it's true that the cost projections that the Stephen Group ran aren't all that different from the cost projections from the state's Department of Human Services that were run when the debate began back in 2013, the aginners never trusted the DHS. They never trusted the actuarial firm that DHS hired. That's why the consultant, for all of our snickering, is important. Now the fiscal and economic importance of the private option is being presented by the outside analysts hand-picked by hardcore opponents of the private option. And the task force itself forced legislators to work through the nuts and bolts, and see the facts, figures, and legal constraints for themselves.

I asked Collins whether, given the way that things worked out, it was actually politically helpful that he lost the battle over the consultant, and the aginners got their choice. Collins declined to speculate, but it sure seems that way to me. In many ways, the Stephen Group is describing the same lay of the land on the private option that lots of other folks have been describing for years. But this time, the aginners might actually listen.  

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