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Lawmakers skeptical of Arkansas plan ‘privatizing’ Medicaid

Lawmakers skeptical of Arkansas plan ‘privatizing’ Medicaid

Idaho Freedom Foundation staff
December 9, 2013
[post_thumbnail]Richard Armstrong, director of the Idaho Department of Health and Welfare, outlined an plan in Arkansas dealing with Medicaid eligibles. He made his presentation to a legislative health care task force.

The Idaho Legislature Health Care Task Force heard testimony Monday about an Arkansas plan dealing with Medicaid expansion. While unique, the plan drew plenty of questions from skeptical lawmakers.

Richard Armstrong, director of the Idaho Department of Health and Welfare, in a 30-minute presentation, explained to the task force (comprised of members of the Idaho House of Representatives and the Senate) the Arkansas system of using federal Medicaid funds to purchase private insurance plans through the state’s insurance exchange, and then extending those insurance plans to those who are deemed eligible for Medicaid.

“This solves the problem of people bumping back and forth in and out of private insurance, getting into the federal Medicaid program and then falling out of it,” Armstrong explained. “In the case with Arkansas, they’re all in private insurance.”

Begun in 1965, the Medicaid program provides certain health care services to individuals and families with low incomes and limited resources. Financed with a combination of federal and state tax revenues, the increasing costs of Medicaid have in recent years become a topic of growing concern among the individual states, despite the eligibility of the program being based on a variety of means testing processes.

A key element of President Barack Obama’s Affordable Care Act (Obamacare) law was to have mandated that the individual states reduce eligibility requirements for Medicaid and expand the number of participants in their respective programs. However, the United States Supreme Court overturned that component of the Obamacare law, so expansion of Medicaid is now left as an elective choice for each individual state.

Government health policy officials in Arkansas were consulted last year by a separate task force assembled by Gov. Butch Otter, when the creation of an insurance exchange was first under consideration. In September of this year, Washington Post health policy reporter Sarah Kliff described the Arkansas approach with Medicaid as a “weird trick,” and said that no other state is currently using Medicaid funds to purchase private insurance.

“The Affordable Care Act says you can either get a subsidy or you can get Medicaid, but you can’t get both,” Armstrong told the legislators. “You have to decide which bucket you’re going to go in. In this plan, either way the coverage is identical, because in both cases the coverage is being purchased off the insurance exchange.”

During questioning, task force member Rep. Lynn Luker, R-Boise, asked Armstrong about the impact to Idaho’s state budget should Idaho pursue a Medicaid expansion plan like Arkansas. “I understand the federal subsidy part of this, but in terms of state costs, what would that be like?” Luker asked.

Armstrong responded that both Idaho’s government-run health insurance exchange and the state’s Medicaid program are currently funded with federal dollars. However, he said that the state insurance exchange is supposed to become self-funding (without federal subsidies) in 2016, in which case the cost to the exchange for administering Medicaid-funded insurance purchases would be unknown.

After Armstrong’s presentation the task force was updated on current developments with Idaho’s government-run insurance exchange by Amy Dowd, the exchange’s executive director.

Sen. Dan Schmidt, D-Moscow, asked Dowd how Idaho’s insurance exchange was managing insurance applicants who were shown to be eligible for Medicaid. “In Arkansas there is indication that Medicaid eligibles received a bit of a nudge,” Schmidt said. “Has there been any thought to offering that to Idahoans who are eligible?”

Dowd indicated that, yes, Idahoans who go to the state’s insurance exchange website and who qualify for the welfare program are directed to enroll in it.

In October of this year, Armstrong told the exchange’s board of directors that the exchange was having success and was placing eligibles into the Medicaid program.

While one of the stated purposes of the task force meeting was to discuss some of the causes of increased health care costs, several task force members remained skeptical that using Medicaid funds to purchase private insurance for the needy would help with reducing costs.

“We’re making America a more socialized country with this kind of approach, we certainly know that much,” commented Sen. Steve Vick, R-Dalton Gardens. “But this won’t reduce health care costs. It may improve conditions for the end user, in as much as one might find it easier to get in to see a doctor with private insurance rather than Medicaid, but it won’t save money for taxpayers.”

Rep. Brandon Hixon, R-Caldwell, expressed some skepticism. “I’m very leery of this,” he told IdahoReporter.com. “Forty-three cents of every dollar that we receive from the federal government is borrowed money, so this drives up the debt. I need to learn more about this approach, but I don’t like what I see thus far.”

Armstrong told IdahoReporter.com that he was asked by legislators to investigate the Arkansas approach to Medicaid and to report on it, and that he was not personally endorsing it. “We’ve also thoroughly researched Medicaid expansion in Iowa and Indiana,” he added, noting that there are reports that Pennsylvania is also considering a Medicaid expansion plan like that implemented in Arkansas.

Rep. Gary Collins, R-Nampa, told IdahoReporter.com that “the Affordable Care Act has nothing to do with making health care more affordable. All these subsidies that are being handed out have to be paid for somehow, and it appears that they will be paid with increased costs to insurance purchasers.”

Armstrong, however, says that under the Arkansas plan those who purchase insurance through the state’s exchange are not charged extra fees so Medicaid recipients can receive private insurance as well.

“Under the current plan that can’t happen,” said Armstrong. “The price of insurance for those paying for it and those who get a subsidy have to be the same. The question is, where will administrative costs for this be in five or 10 years? That remains to be seen.”

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