Digging into the policy details: Gov. Asa Hutchinson's proposed changes to the private option | Arkansas Blog

Wednesday, February 17, 2016

Digging into the policy details: Gov. Asa Hutchinson's proposed changes to the private option

Posted By on Wed, Feb 17, 2016 at 6:57 PM

As I've been covering on the blog today, Gov. Asa Hutchinson addressed the Health Reform Legislative Task Force today on his plan for to continue the private option with conservative tweaks, which he calls "Arkansas Works."

The feds have given broad approval for the governor's plan (with one exception: the feds flatly rejected Hutchinson's proposal for an asset test). The big takeaway: the governor got permission for conservative bells and whistles, but Arkansas Works will generally not feature punitive elements. The plan will impose premiums and co-pays on some beneficiaries and refer others to work programs — but beneficiaries won't lose coverage if they fail to pay, or fail to participate in job training. 

The fine print still needs to be hammered out. The state will begin working on an application for a state plan amendment to implement the governor's changes, to be submitted in the spring. A working draft of that application will likely be available when the legislature convenes for a special session to vote on Arkansas Works in April. Pending legislative approval, the state will submit its application in the spring. Final federal approval — again pending approval from the state legislature — would come in late summer. 

All that said, the governor has established a broad agreement with the feds for his policy framework and has enough details to develop legislation to move forward with Arkansas Works. The governor today offered the clearest picture of Arkansas Works we've seen to date and answered a number of open questions about his plan. Let's take a look at the key elements (outlined in a document he released today; I also followed up with the governor and his team to verify certain nuances). 

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This is the governor's plan to make more use of employer-sponsored insurance (ESI) in the private option. The private option covers anyone who makes less than 138 percent of the federal poverty level (that's around $16,000 for an individual or $33,000 for a family of four). That includes some low-wage workers, and in some cases their employers may offer ESI. Right now, someone in that situation would typically prefer to enroll in the private option instead of the plan offered by their job because the private option has no premiums and little to no cost-sharing.

Hutchinson's idea is to force low-income workers in this situation to go on their ESI plans rather than enrolling in the private option. Crucially, Medicaid would pay for the difference in premiums and cost-sharing, and cover any Medicaid benefits not covered by the plan. So from the perspective of the beneficiary, the coverage would be just as good.

One new development here: Hutchinson is negotiating with the feds to see if Medicaid can also help pick up some of the costs of ESI for certain small employers. Basically, this would be an attempt to entice more small businesses to offer ESI to the sort of low-wage employees who are eligible for the private option. 

click to enlarge asacare_keys_2.png

As expected, Arkansas Works will mandate that state agencies refer unemployed beneficiaries to job training and job search programs. There will be no work requirement; though Hutchinson has expressed interest in that concept in the past, the federal government will not allow states to mandate that beneficiaries have a job as a condition of eligibility. 

The big news here: beneficiaries won't lose coverage or face any punitive consequences if they don't participate in the work referral program. There may be positive incentives (perhaps additional benefits such as dental or vision coverage) but beneficiaries won't be mandated to participate.

Burwell told Hutchinson that there were additional mechanisms to provide incentives for beneficiaries through federal agencies such as the Department of Labor and that the feds would work with the state on that front. 

Note to watch: While there will be no punitive elements in Medicaid for failure to participate in the work referral activities, the state could potentially seek avenues to impose negative consequences in other programs. 

click to enlarge asacare_keys_3.png

As expected, some beneficiaries will be charged premiums and co-pays. A number of important details emerged today: 

* Premiums and co-pays will only be charged to beneficiaries who make more than 100 percent of the federal poverty level (the governor had previously floated the idea of charging them to beneficiaries down to 50 percent of FPL).

* The premiums will be $19 per month, the governor said. Some other states have charged premiums of 2 percent of income, which can be significantly more than $19 per month for some beneficiaries; it appears Arkansas Works will have a flat $19/month premium for all beneficiaries above the poverty line. Arkansas Works will also feature co-pays, which the governor typically hasn't mentioned in previous outlines of his plan. No details are yet available on what form the co-pays will take.

* Premiums and co-pays will likely be waivable if beneficiaries comply with best wellness/healthy behaviors practices. 

* There will be no penalty for failure to pay premiums. Beneficiaries will incur a debt to the state but they will not lose coverage for failure to pay. The insurance companies will be responsible for the difficult task of collecting premiums. 

click to enlarge asacare_keys_4.png

There was some question about whether the feds would allow the state to eliminate 90-day retroactive eligibility. It appears that the state got the okay, although that's likely contingent on Arkansas clearly establishing that the its troubled enrollment and eligibility system is working properly. Under this waiver, beneficiaries would only be covered once they enrolled, as opposed to current Medicaid rules, which provide coverage for the three months prior to enrollment.

Support for special health care reporting made possible by the Arkansas Public Policy Panel.

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