Not the threat they say

So we confront today the latest news on our private-option form of Medicaid expansion.

John Brummett is blogging daily online.

Our waiver from the federal government to use federal Medicaid expansion money to buy private insurance for the working poor puts the per-client cost at $477 per month. But our actual experience currently is $496 per month.

The waiver says the state will ante up the difference if, after three years, our actual costs exceed the estimates.

So here’s what right-wingers are saying: Aha. The sky is falling. We told you so.

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They say a small overage per policy per month comes to real money when you multiply it by 12 months and three years and a quarter-million working poor people eligible to be newly insured under this program.

They say that government never does anything efficiently.

They say we must get out while the getting is good before we all wind up in the poorhouse, both in the federal and state treasuries.

But the sky remains solidly aloft over Arkansas, for a litany of reasons: We’re talking about three months of experience, and the state liability comes after a three-year average. Thus we have an ongoing incentive to monitor and hold down costs, which is one of the main points, indeed advantages, of the private option.

One of our carriers, Centene Corp. of St. Louis, offers visual and dental coverage on some health-exchange policies, and many of the private-option recipients chose those.

The state already has decided that, beginning next year, it will choose cheaper plans for those persons. That’s a lot of the overage right there. Some of the state’s cost has to do not with premiums, but with “wraparound” charges to make sure all Medicaid mandates are met for private-option policyholders. Those are charges more under the state’s control and presumably susceptible to trimming than private carriers’ premiums.

The state will soon unveil a waiver request for a health savings account that will give private-option recipients the incentive to choose a kind of personally managed block grant that will carry a lower premium. QualChoice had to cap its participation in the private option in the first year because it was pending for sale.

That sale is now completed to Catholic Health Initiatives. QualChoice should be more fully engaged in competition on the exchanges next year.

Actual medical usage so far by private-option clients has been less than expected, a consideration that, if continuing, would require carriers to make refunds to the state at the end of the year. Thanks to the infusion of tens of thousands of state-paid customers, Arkansas has one of the youngest health-exchange populations in the country, which should hold down premiums in the state for everybody in the second year.

All of that should be considered in the context of the waiver cap rising in the second and third years, to $508 per month next year and $523 the year after.

The state has the option to ask to have the waiver caps raised beyond those levels. The existing contract says “adjustments may be sought”based on experience.

Finally, the federal government loves that Arkansas is advancing the private option as a model for other red states to expand Medicaid.

If necessary, it almost assuredly would raise our caps to cover our actual experience rather than give opponents fuel for ending the program altogether.

State Sen. David Sanders of Little Rock, one of the Republican architects of the private option and the one who rides herd most closely on its ongoing implementation, makes this point: The good thing is that we are keeping up with these costs and possess a financial incentive to lower them.

That’s so much more financially healthy and responsible, he says, than merely continuing to lather big dollars on a fee-for-service Medicaid model. That, he says, was the essential conservative concept in the first place.

So the greater threat to the private option is not policy soundness. This policy is pretty sound.

The threat is not fiscal peril to the state. We can cut costs and, anyway, the federal government doesn’t want to penalize us and has the authority to grant us a little slack.

The threat is simple electoral politics, meaning the decisions voters make in Republican legislative primaries in May-in which a few private-option supporters have challengers on the right-and for governor and legislative seats in the general election in November.

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John Brummett’s column appears regularly in the Arkansas Democrat-Gazette. Email him at jbrummett@arkansasonline.com. Read his blog at brummett.arkansasonline.com, or his @johnbrummett Twitter feed.

Editorial, Pages 15 on 04/24/2014

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