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‘Private Option’ For Medicaid Expansion Would Cut Some Benefits

By Christine Vestal, Stateline.org

WASHINGTON — When Arkansas won federal approval to use Medicaid expansion dollars to help low-income people purchase private health insurance, officials on both sides of the aisle applauded the compromise.

For supporters of the Affordable Care Act, it meant coverage for the millions of uninsured Americans who live in states that have resisted Medicaid expansion under the ACA. For governors and lawmakers opposed to the law, it was a politically feasible way to accept billions in federal dollars and improve the overall health of their residents without embracing “Obamacare.”

Now, as more states craft their own versions of what is known as the “private option” — and Arkansas seeks revisions to its original plan — advocates are increasingly concerned that the private market approach to Medicaid expansion could erode the effectiveness of the Medicaid program.

At issue are so-called “wraparound” benefits, such as free rides to doctor’s offices, designed to give low-income people the same kind of care and health outcomes as people with higher incomes. Such benefits typically are not included in private insurance plans.

“Medicaid is different from private insurance for a lot of good reasons,” said Joan Alker, director of Georgetown University’s Center for Children and Families. “Trying to make it look like private insurance without Medicaid’s unique features could lead to worse health outcomes, increased hospitalization and more preventable deaths.”

Non-emergency transportation may be the most prominent “wraparound” benefit, but it is not the only one.

Other benefits include the periodic screening, diagnosis and treatment of children and young adults for conditions such as lead poisoning, malnutrition and mental illness, as well as limits on co-pays and premiums, which can prompt people to do without care. Medicaid agencies also are required to provide a consumer appeals process for rejections of eligibility and denial of claims.

Middle-class people with private insurance don’t expect any of these benefits to be included in their policies. “But for low-income people with no discretionary income, these services make a huge difference,” said policy analyst Marsha Simon, president of Simon and Company.

Supporters of the private option argue that newly eligible Medicaid enrollees are better off with private insurance. They point out, for example, that Medicaid recipients with private insurance would be able to keep their coverage even if their earnings increase and they eventually make too much to qualify for Medicaid.

Republican lawmakers in Arkansas recently touted the denial of wraparound services — and the resulting savings to the state — as they gathered the conservative votes they needed to renew the private option. The transportation benefit alone typically accounts for up to 2 percent of a state’s Medicaid costs, or about $83 million for Arkansas.

But Simon argued that providing transportation actually saves states money because it allows patients to see doctors regularly in their offices — perhaps avoiding a health crisis requiring an emergency ambulance ride to the hospital.

According to a new report from the Community Transportation Association of America, authored by Simon and Company, 32 percent of all the rides in 2013 were for behavioral health therapy — and the demand for such services is expected to increase. In the states where Medicaid expansion is already underway, an estimated 1.2 million adults have substance abuse problems and more than 1.2 million suffer from mental illness, according to the group.

Eighteen percent of the rides were for dialysis treatments, and 6 percent were for routine visits to doctors’ offices. Other destinations included adult day care, outpatient surgery facilities, cancer treatment centers, pharmacies, smoking cessation and weight loss centers and physical therapy facilities.

In approving Arkansas’s original plan, the U.S. Department of Health and Human Services required the state’s Medicaid agency to supplement private coverage for the newly eligible Medicaid enrollees by providing all wraparound services, which are mandatory under the 1965 Medicaid law.

But when it approved Iowa’s plan late last year, the federal government allowed two exceptions: Iowa could eliminate non-emergency transportation for one year and charge nominal premiums and co-pays to new enrollees. Pennsylvania is asking for similar dispensations and some new ones, and Arkansas lawmakers now say they want what Iowa has.

So far, Arkansas has yet to formally ask for an exemption from transportation services, but discussions in the Legislature indicate the state will soon request one. Pennsylvania’s private option proposal, which was filed last year, includes an exemption from transportation services, as well as a request to charge premiums and co-pays. Next in line are New Hampshire, where lawmakers approved a private option earlier this week (Democratic Gov. Maggie Hassan has said she will sign the bill), and Tennessee, Utah and Virginia, where officials are in the process of customizing their private option plans.

“I’d be really surprised if we see any more straight Medicaid expansions,” said Judith Solomon of the Center on Budget and Policy Priorities. “Every one of the remaining states wants to put its own stamp on it.”

Photo: ProgressOhio via Flickr

Arkansas House Votes To Deny Health Care Coverage To 100,000 People

Disappointing news for tens of thousands of Arkansas residents arrived on Tuesday, when the state’s House of Representatives failed to pass legislation that would have provided funding for the state’s “private option” Medicaid plan.

The private option plan was first devised by Arkansas’ GOP-controlled legislature in 2013 as an alternative to the Medicaid expansion prescribed by the Affordable Care Act. Under the plan, Arkansas distributes federal funds – provided under the health care reform law – to eligible recipients, most of whom belong to the state’s poorest population, who would then use the funds to buy private health insurance plans that they would otherwise be unable to afford.

Though the private option passed in 2013 with support from Republicans and the state’s Democratic governor, Mike Beebe, in recent weeks several GOP politicians have threatened to abandon the program, fearing that their support could give their more conservative challengers a point of attack in upcoming primary elections.

On Tuesday, the appropriations bill containing the private option plan failed in the 100-member house, in a 70-27 vote – just 5 votes shy of passing.

House Speaker Davy Carter, a Republican, says the bill will be brought to the floor again.

“We’re going to vote again tomorrow and the next day and the next day,” said Carter, who also says that he hopes the bill will pass.

Lawmakers have until March 19 to pass the bill, and Governor Beebe is optimistic that the Senate has the 27 votes it needs to push the legislation through Arkansas’ upper chamber.

Beebe also warns that if lawmakers ultimately fail to pass the bill, they would create a $90 million hole in the state budget and leave approximately 100,000 people — 87,000 who were ineligible for Medicaid and another 13,000 who were eligible for Medicaid but had not enrolled — who have signed up for the program uninsured. That’s less than half the number of low-income residents whom Beebe’s office estimates will participate in and benefit from the program if it continues.

Not passing a bill could also have nationwide implications, considering that several states are adopting their own version of the private option plan. For Republican critics, the argument against adopting such a plan is that supporting a program dependent on funds provided under Obamacare equates to support for the health care law and Medicaid expansion. If the Arkansas legislature votes to discontinue funding for the program, the move may lend weight to critics’ argument and empower them in states that hope to move forward with the plan.

Still, even Republicans who do not support the ACA say that the state should at least take advantage of it to help its hospitals and poorest residents.

“When we can’t defeat bad policy, it’s our responsibility to do everything we can to influence it,” said Republican state representative Nate Bill.

Photo: L. Allen Brewer via Flickr

Republicans Consider Stripping Health Insurance From Tens Of Thousands Of Arkansans

In Arkansas, approximately 83,000 low-income residents are in danger of losing their health insurance as early as July 1.

In 2013, Arkansas’ Republican-controlled legislature devised an alternative plan to expand Medicaid while still protecting the state’s poorest residents and hospitals. Through the plan, commonly referred to as the “private option,” Arkansas distributes federal funds — provided under the Affordable Care Act — to eligible recipients, who then use the funds to buy private health insurance plans. Proponents note that the plan offers private coverage to residents who would otherwise be unable to obtain it.

As The Washington Post reports, Governor Mike Beebe (R) welcomed the plan, saying it would save taxpayers nearly $90 million this year. The Obama administration later approved the plan, adding two necessary conditions: that cost-sharing and recipients’ benefits remain the same as the traditional Medicaid program, and that the total costs of the private plan do not exceed those of implementing traditional Medicaid expansion.

Over the past year, the private option has become so popular that variations of it are now being adopted in several states, like Pennsylvania and Utah.

“In crafting the ‘private option,’ Arkansas has provided a pathway for other states. They truly are trailblazers,” Deborah Bachrach, a partner with consulting firm Manatt Health, told  the Post.

In recent weeks, however, Republicans have threatened to jump ship on the plan, jeopardizing the program that offers protection to tens of thousands of Arkansans.

With the state’s May primaries quickly approaching, Republican lawmakers facing more conservative challengers are feeling the pressure to vote against a renewal of the program’s financing.

“You’ve got a very small minority of people who can derail this,” explains Governor Beebe, who says that the sudden lack of support has to do with “ideology versus pragmatism.”

“If we lose one or two votes, it’s critical,” he added.

Considering that Arkansas requires 75 percent of the members of both houses to pass appropriations measures, “one or two” GOP votes are certainly critical to the program’s future. And in recent weeks, two Republican state senators have voiced their opposition to extending the private plan.

Senator Missy Irvin, who voted for the program last year, announced she would no longer support it, citing a decision made by Arkansas Blue Cross and Blue Shield – Arkansas’ dominant health insurance company – to cut reimbursement rates by 15 percent to specialists who participate in its federally run online insurance exchange plans. Irvin might have had another motive, however; she is currently facing a primary challenge from Tea Party candidate Phil Grace, who pointed to Irvin’s support for the private option as one of the main reasons he chose to run.

The argument against the plan made by Grace and other conservatives like him is rather vague, but it still has the power to sway other GOP votes.

“Right now, Washington is broken and trillions of dollars in debt. We can’t count on D.C. to keep promises for any funding and Arkansas certainly can’t foot the bill. The only way to deal with D.C.’s issues is for states to band together and push back,” Grace says.

Grace’s opposition to the private program – which has been echoed by other conservatives running in 2014 — steers clear of the GOP’s typical “big government” arguments, leaving it seeming rather arbitrary. 

State Senator John Cooper, another Tea Party favorite, also says that he will not vote to reauthorize the plan’s funding — which is not a surprise, since he won the state’s special election by running against the program. Cooper argues that it will not save Arkansas money in the long term, despite reports to the contrary.

If Republicans vote against the private option – a vote that come could as early as next week – the implications for the state’s poor residents are burdensome and great. Before the private option existed, Arkansas had one of the most restrictive Medicaid programs in the nation, which made it especially difficult for struggling individuals and families to obtain coverage.

Photo: L. Allen Brewer via Flickr