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‘Private delivery’ possible for Arkansas Medicaid expansion

story by Roby Brock, a TCW content partner and owner of Talk Business
roby@talkbusiness.net

Arkansas Surgeon General Dr. Joe Thompson says the new Medicaid option for the state may need a more accurate name, and he says that avoiding a federally-run insurance exchange could help Arkansans avoid a costly tax.

In a lengthy interview with Talk Business Arkansas, Thompson walked through the mechanics of the flexibility approved for the state Medicaid program by U.S. Secretary for Health and Human Services Kathleen Sebelius.

The new scenario presented to lawmakers on Tuesday (Feb. 26) would allow the state’s portion of money for Medicaid expansion to be used in the forthcoming health insurance exchanges to supplement private insurance plans for low-income citizens.

“From a financial perspective, what the secretary re-confirmed was that the feds were going to pay 100% of the costs for the Medicaid expansion and then – it was new information – it was up to the state completely on what mechanism we chose as a delivery vehicle,” said Thompson. “So the health insurance exchange is where we got the private sector option to use the 100% federal funds to essentially buy people into a private company-run health insurance product as opposed to expand our state-run Medicaid program.”

WHAT TO CALL IT
When asked, Thompson said the concept may not be accurately called Medicaid expansion. It is really a funding shift from Medicaid to the health insurance exchanges prescribed by the Affordable Care Act.

“I think we’ll have to see where the House and the Senate end up,” he said. “I think it is not ‘expanding Medicaid’ in the traditional sense. It is using federal funds through Medicaid to buy people into the private delivery system.”

Thompson also noted that the new flexibility might lead to a review of what type of health insurance exchange the state will conduct. Last session, lawmakers – led by Republican opposition – shot down plans for a state-run health insurance exchange.

Gov. Mike Beebe and health insurance officials settled on a state-federal partnership for the exchange, but discussion of a federal-run exchange has been openly discussed.

Thompson said there is a 3.5% insurance premium tax to be levied on plans in the federal-only and state-federal partnership exchanges. The money will be used to cover federal costs associated with the exchanges, he said.

With a state-run exchange, Arkansas may be able to avoid the 3.5% insurance premium tax being levied.

“We might be able to protect some of our citizens from some of that federal tax if we are doing a state-only exchange,” said Thompson.

POLITICAL BENEFITS
Thompson said there are some political benefits to taking advantage of this option, which was received favorably by Democratic and Republican lawmakers. Some of the political benefits include:
• Not growing people on a “welfare card” through Medicaid;
• Using the private sector and its efficiencies to deliver care;
• A consumer experience similar for different income levels;
• The feds still pay 100% of the costs for first 3 years; and,
• Providers could be reimbursed at a higher rate than a Medicaid reduced rate

Thompson says another advantage to having the Medicaid additions in health insurance exchanges is that it will cut down on “churn,” which happens when a Medicaid recipient moves off of Medicaid to a private insurance plan and vice-versa.

“They can stay on the same plan going up and down the income elevator and not have to switch,” he said.

Thompson said a variety of legislative opinions of other features of the Medicaid-health insurance exchange hybrid include subsides and co-pays. Some lawmakers have discussed means testing and drug testing.

As an example, Thompson said co-pays may be used to discourage emergency room trips, but not applied to preventive health care, such as immunizations, mammograms or annual check-ups.

“I think all of those lead us to a much newer approach to how we have traditionally dealt with Medicaid,” he said.

LIFE SAVING AND ECONOMY SAVING
Thompson, who also heads the Arkansas Center for Health Improvement, rolled out a new collection of economic and health care statistics from 2012.

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Last year, 14% of Arkansans in rural counties had no health insurance during hospitalization stays. The Medicaid expansion concept would improve that statistic, meaning more money for private hospitals and medical clinics.

Thompson estimates these changes and improvements in financing could lead to 2,300 lives saved across the state.

“Because the insurance will flow to the rural parts of the state, most of the money is going to flow to the rural parts of our state. Some of our counties will have the potential to get an additional $300-$400 per person per county each year if we do the expansion and optimize the health insurance exchange.

Link here for the video interview with Thompson.

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Comments

More smoke and mirrors from the state....

Private delivery of expanded Medicaid would reduce costs? RRRight! Tell me another one. As proof, the good doctor said, "Private delivery would allow higher payments to providers." (As if that saves money?) And the private sector adding "efficiencies" to deliver care (when the most cost-effective program in the country is the VA single payer system.) Lies and more lies....and a general public gullible enough to believe them.

Less Smoke & Mirrors, More Competition Is Good

I happen to disagree with ole “anonymous”. Maybe less government involvement in the actual administering of Medicaid may be a good thing. Any reasonable person has to realize the many benefits of utilizing the private sector and allowing truly competitive market forces to work in administering good and services. However, I’m not saying there shouldn’t be any oversight watching the private hospitals and clinics.

However

All figures show that Medicare and Medicaid as administered are much more efficient than private models. Cost growth is more contained than private insurance thus suggesting other efficiencies. That's just from the Kaiser Foundation report but other studies looking at it bear the same results. The problem with trying to roll with free market philosophies in health care is that it isn't a free market and has no true competition. It is more of an oligarchy. Time has a great article out now in regards to the healthcare industry worth reading, very informative including showing the gigantic profitable revenue streams coming from hospitals (they aren't really non-profit), as well as the liars math used to calculate their charitable contributions. Free market is great but one must remember that even Hayek believed in social safety nets.
All figures show that Medicare and Medicaid as administered are much more efficient than private models. Cost growth is more contained than private insurance thus suggesting other efficiencies. That's just from the Kaiser Foundation report but other studies looking at it bear the same results. The problem with trying to roll with free market philosophies in health care is that it isn't a free market and has no true competition. It is more of an oligarchy. Time has a great article out now in regards to the healthcare industry worth reading, very informative including showing the gigantic profitable revenue streams coming from hospitals (they aren't really ...>> Read the entire comment.

interesting thought mr swink

the government has been involved up to their ears in health care for a long time and the cost has continued to go thru the roof so maybe the private sector could do a much better job thru competitive bids that are allowed to cross state lines! some oversight will always be necessary to discourage price fixing and insure quality care so sometimes a little less can be a little better! its worth a try because what we have now is not keeping the lid on costs!

Well that is sort of true

It won't save money. However it funnels more money to insurance companies, Doctors, and businesses, thus it is the only way that our current state legislature will allow expansion of healthcare to the poor and children. They could just do the expansion for less money but then those docs and businesses couldn't make some windfalls off of it.

Inadvertant Class system due to Medicare

It appears that the changes to Medicare, Medicaid, and Tri-care are creating a class system. The classes are those with government backed insurance and those with private. I have heard acquaintances on all three say that they have been dropped by doctors or refused service due to the being on government insurance. One of these was referred to a doctor that took Tri-care. This doctor took the “prescription and your out of here” approach to medicine. It seems that the doctors that take the government plans are working on volume to make a living. The doctors that take private insurance are still taking the time to visit and address issues. The point is that it may be that compensation to the medical professionals has been cut too far. Maybe some free market competition will help. The perception is that these doctors are all greedy and just want money. I do think they get a fair shake. They go to 8 years of college plus residency. They pay astronomical prices for insurance. They have to purchase equipment that is very expensive. A used (refurbished) x-ray machine is $70K plus. Oh yeah, you have to have someone that is qualified and trained to use it on staff. Why would someone want to go into the medical field in these days and times? I fear that we will face a shortage of doctors in the coming years.

Not so much

While I am sure you know people that may have experienced issues the vast majority or those on Medicare do not. According to MedPAC only 2% of beneficiaries reported any trouble finding a primary car physician willing to take Medicare which is the same percentage reported by people ages 50-64 with private insurance. Approximately same figures for specialists. While medicaid is a bit more difficult it still isn't any worse than most private insurance plans. Medicaid is accepted at around 50% of physicians and medicare is accepted around 75%, that's much better than most private insurance acceptance.

Re: Not so much

I think you should do your own study and call physicians' offices at Cooper Clinic, Sparks Clinics, and Mercy Clinics and see if you come up with that 2% number. I work in the medical field and have a spouse who is on Medicare, and I don't think the MedPAC number is accurate,at least not in Fort Smith, Arkansas.