Private-option plans costliest

Despite restrictions meant to keep down the cost of the private option, the state Medicaid program in most cases is paying for the most expensive “silver,” or midlevel coverage plan, offered by each insurance company, records show.


RELATED ARTICLE

http://www.arkansas…">Insurers: 'Special' sign-ups add costs

photo

Sen. David Sanders, R-Little Rock is shown in this photo.

In Pulaski County, for instance, Arkansas Blue Cross and Blue Shield is offering four silver-level plans, but only one, the Silver 3500 plan, is available to private-option enrollees.

For a 40-year-old participant, the state Medicaid program pays a monthly premium for the plan of $324.50.

A consumer of that age who didn’t qualify for Medicaid or other financial help could pay a monthly premium of $307.12 for the Silver 3350 plan, which is not available in the private option.

The plans are named for the size of the annual deductible a consumer must meet in some instances before coverage for certain services kicks in. The Silver 3350 plan, for example, has a deductible of $3,350.

If a consumer wanted a lower deductible, he could pay $313.20 a month for Blue Cross’ Silver 1500 plan or $310.29 for the Silver 2500 plan.

Consumers who don’t qualify for assistance pay the same premium for the Silver 3500 plan that Medicaid pays under the private option.

But for private-option enrollees, the Medicaid program also makes additional upfront payments that eliminate the plan’s $3,500 deductible and cover most or all of the enrollee’s out-of-pocket spending for medical care.

At a meeting in July of the state Health Reform Legislative Task Force, Arkansas Blue Cross and Blue Shield representatives said private-option enrollees, who make up a large portion of the Arkansans who are insured in the individual insurance market, tend to have more medical expenses than the company’s other customers.

Company spokesman Max Greenwood said in an email last month that rates for the company’s plans are set “based on considerations of benefits, claims and taxes.”

A higher use of health care services that might be expected to be associated with subsidies that reduce or eliminate the services’ cost to the enrollee was not a factor in setting the rates, she said.

Sen. David Sanders, R-Little Rock and a sponsor of the law creating the private option, said the standard plan elements required by the private option could be partly to blame for the program’s costlier premiums.

In designing other silver-level plans, he said, insurers have more flexibility in setting co-payments and other charges, allowing the companies to charge lower premiums.

But even under the current rules, he said, insurance companies have been too conservative.

“The rates for the private-option policies should be lower,” he said.

Arkansas created the private option in 2013 as its primary way of extending Medicaid coverage to adults with incomes of up to 138 percent of the poverty level: $16,243 for an individual, for example, or $33,645 for a family of four.

Almost 199,000 Arkansans were enrolled in the program as of Oct. 15.

Silver-level plans are designed to pay 70 percent of medical costs for a typical consumer. For private-option enrollees, Medicaid subsidies increase the plans’ benefits so that it pays all or almost all of those costs.

The plans are designed so that, when the subsidies are applied, standard co-payments are charged to participants with incomes of at least 100 percent of the poverty level.

For instance, such enrollees pay $8 for a doctor’s visit and $10 to visit a specialist. The co-payments are not required for participants who make monthly contributions of up to $15 to help pay the cost of their medical care.

Like those of other plans offered through the state’s federally run health insurance exchange, the premiums for plans purchased by the Medicaid program vary according to the enrollee’s age, the coverage region where he lives and in some cases whether he is a smoker.

To hold down costs, the Medicaid program last year barred private-option plans from offering benefits that are not required by state or federal law, such as vision and dental coverage.

This year, private-option plans also must be the cheapest or second-cheapest plans that meet the program’s requirements in a coverage region or have monthly premiums that are within 10 percent of the premium for the region’s second-cheapest plan.

Because of that restriction, Minnetonka, Minn.-based UnitedHealth Group’s plans are available only in the 13 counties, including Pulaski County, that make up the state’s central coverage region.

But even in that region, the Medicaid program is paying for UnitedHealth’s most expensive silver-level plan, known as Silver Compass Plus 4500.

As its name suggests, the plan has a $4,500 annual deductible, which is eliminated in the version of the plan used by private-option enrollees.

For a 40-year-old participant, the Medicaid program pays a monthly premium of $358.75.

For coverage in one of the company’s other six plans, a consumer of that age who didn’t qualify for financial assistance would pay a premium ranging from $330.96 for a plan with a $5,000 annual deductible to $346.56 for a plan with a $2,000 deductible.

Little Rock-based Qual-Choice Health Insurance also is offering private-option enrollees its most expensive silver-level exchange plan.

For a 40-year-old Pulaski County resident, the premium for the plan is $354.36.

A resident of the same age who did not qualify for subsidies would pay a monthly premium of $332.16 for coverage in the company’s other silver plan. Under the plan, however, the consumer also would have a deductible of $3,000, compared with $2,500 under the unsubsidized version of the company’s private-option plan.

The Medicaid program is paying for the cheapest silver-level plan offered by St. Louis-based Centene Corp. For a 40-year-old Pulaski County resident enrolled in the plan, the Medicaid program is paying a premium of $344.08 a month.

A version of the plan that is not available to private-option enrollees includes adult vision and dental benefits in exchange for a higher premium — $374.02 in the case of a 40-year-old Pulaski County resident.

The national Blue Cross and Blue Shield Association, which also offers plans on the exchange, only has one silver plan available to private-option enrollees.

The plan has a monthly premium of $343.23 for a 40-year-old Pulaski County resident.

Compared with last year, the premiums for private-option plans offered by Arkansas Blue Cross and Blue Shield and the national association increased this year by 8 percent to 9 percent, depending on the plan and coverage region.

The premiums for Centene Corp.’s plans increased in some regions and fell in others, while QualChoice premiums fell by amounts ranging from 20 percent in the northeastern region to less than 1 percent in the northwestern region.

UnitedHealth Group is offering private-option and other exchange plans for the first time this year.

A provision in the federal 2010 Patient Protection and Affordable Care Act limits the profits that insurance companies can make from premiums.

The law requires the companies to spend at least 80 percent of the premiums on medical care, rather than on salaries and administrative expenses.

Because of that rule, Centene last year paid a refund of $6.7 million to the state Medicaid program in connection with the private-option premiums it collected in 2014, when the company reported spending 76 percent of the premiums on medical care.

The premiums for the private option make up a large part of the cost of the program, which is subject to a cap established in the federal waiver authorizing the program.

As long as the cost per enrollee over a three-year demonstration period stays below the cap, which will be calculated based on monthly targets, the federal government will pay the full cost of the program. If the cost exceeds the cap, Arkansas will owe the difference to the federal government.

In November, the cost per enrollee was more than $16 below the target of $500.08. This year, the monthly target is $523.58.

Gov. Asa Hutchinson has said he will seek approval from the state Legislature and federal government for changes to the private option that will take effect in 2017, when Arkansas will begin paying a portion of the cost.

Those changes include charging premiums to certain enrollees, requiring job training for the unemployed, and subsidizing coverage through employer-sponsored plans — instead of through the private option — for those who have access to job-based coverage.

Upcoming Events