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Arkansas think tank: Private Medicaid expansion wasteful, inefficient

Arkansas think tank: Private Medicaid expansion wasteful, inefficient

Dustin Hurst
December 10, 2013
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December 10, 2013
[post_thumbnail] Rep. Brandon Hixon, R-Caldwell, is leery of an Arkansas plan dealing with Medicaid.

A plan to expand the Idaho Medicaid system using government payments to private insurers is a fiscally irresponsible handout to corporations, one Arkansas think tank said.

Dan Greenberg, head of the Advance Arkansas Institute, a free market think tank based in Little Rock, told IdahoReporter.com that the expansion plan, based on his state’s model, isn’t worth the time or effort.

“In theory, it’s a great idea,” Greenberg said. “If we’re in reality, we have to be skeptical of this.”

As part of President Barack Obama’s health reform law, states across the country must decide if they want to expand their Medicaid programs to cover millions more Americans. The law expanded eligibility upward to cover those identified as the working poor.

While 26 states are moving forward with Medicaid expansion, only one—Arkansas—is implementing a unique plan in which the state government uses taxpayer cash—supplied by the federal government—to buy plans for the new enrollees. The plan, which needed and won special approval from the U.S. Department of Health and Human Services (HHS), was seen as a compromise measure between the Republican Arkansas Legislature and the state’s Democratic governor.

Regardless of the politics, Greenberg said that that plan is nothing but “old wine in new bottles.”

The bait to lure Republicans was the prospect of using the private sector—insurance companies—to cover the new enrollees. How could GOP lawmakers resist their calling card, the boosterism of the private sector?

As advertised, the plan would’ve work splendidly, Greenberg suggested. Unfortunately for his state, the analyst said, the federal government’s heavy hand put the kibosh on any real innovation in the reform effort.

In March, HHS told Arkansas that any plans purchased by these new enrollees would have to offer benefits “comparable” to traditional Medicaid plans.

Poof. There went the cost-savings potential, Greenberg said. Due to the HHS edict, private insurers would lack the power to enact many cost-reducing measures.

Even if the plan were approved as-is by HHS, critics noted that the so-called “private option” would actually cost taxpayers more because private insurers compensate doctors and hospitals at higher rates than Medicaid. The Congressional Budget Office suggested earlier this year that the Arkansas model would cost about $3,000 more per enrollee than traditional Medicaid expansion.

As it stands, Greenberg said the reality of his state’s Medicaid is, “This increases costs, if anything.”
Why is that? Greenberg said that the once-ambitious plan, clipped and trimmed by government’s red tape, now amounts to little more than allowing private companies to administer plans for new Medicaid enrollees.

“There’s no question this is corporate welfare,” Greenberg said. “A lot of this has to do with cosmetics.”

In Idaho, Department of Health and Welfare Director Dick Armstrong laid out the facts surrounding the Arkansas plan Monday before a health care task force. The department’s spokesman, Tom Shanahan, said Armstrong’s duty was not to lobby legislators for or against the plan, but rather to present facts.

Lawmakers gave the plan a chilly reception. State Rep. Brandon Hixon, R-Caldwell, said he is “very leery” of the plan, and expressed concerns that expansion would add to America’s fiscal woes. “I need to learn more about this approach, but I don’t like what I see thus far,” the freshman Republican said.

State Sen. Marv Hagedorn, R-Meridian, expressed similar sentiments in an interview with IdahoReporter.com. “If anything will be considered, in my view, it needs to be paid for without borrowed money,” Hagedorn wrote, noting that America borrows billions annually to pay its bills.

The prospect of Medicaid expansion coming to pass grew dim last week when Otter told attendees at a contractors’ conference that his re-election would be the top priority of 2014, and that a final decision on the health program might wait another year or two.

The Arkansas model does have some fans in the Gem State, though. The Idaho Association of Commerce and Industry (IACI) urged Otter in a mid-November letter to explore the Arkansas model, calling it a “market solution.”

IACI membership includes some of state’s largest health insurers and hospitals.

On ideological grounds, Greenberg pleaded for Idaho lawmakers to avoid the expansion. “No matter what you call it, this would be an expansion of the entitlement state,” he said.

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