The Arkansas Medicaid plan

MedicaidLogoThere was some interesting news yesterday that had nothing to do with sequestration (for my take on that see here), but in the matter of Health and Human Services giving the go-ahead on a plan from Arkansas Gov. Mike Beebe (D) to accept the Medicaid expansion under the Affordable Care Act. This new development follows other recent decisions in conservative states — Florida and Ohio — to participate in the expansion, but Beebe’s plan may change deliberations for those still sitting on the fence.

First, though, some basic background. This part of the healthcare law expands Medicaid eligibility to most Americans in 2014 to within 133 percent of the federal poverty line —around $15,281 for an individual in 2013. The program is a joint state-federal funding arrangement with federal matching depending on the state (the current average is 57 percent). Now the initial offer on the expansion is comparatively appealing; 100 percent federal funding for the first three years. Yet that match drops to 90 percent by 2020, which when coupled with some fears that it could go lower as a part of future deficit reduction has given more than one state legitimate pause on the matter. As a reminder, the Supreme Court decision on the ACA essentially gave states the option of rejecting the expansion without fear of losing funding for the original Medicaid arrangement. Since that time it’s been an ongoing question of which states would accept or reject the deal. Here’s where they stand now (red for rejection, blue for acceptance, grey for undecided):

Screen Shot 2013-03-01 at 1.03.17 AM

This map will change of course, and as with the original Medicaid there is no deadline for the expansion. States are technically free to come and go as the please, although none to my knowledge have every ‘left’ after accepting federal funding. However, as Sarah Kliff reports, the Arkansas plan might sway those still sitting on the (mostly conservative) fence:

[…] Gov. Mike Beebe must get 75 percent of his legislature to sign off on any funds necessary for the Medicaid expansion — a tough sell when Republicans control both the state House and Senate.

What the legislature could be sold on, they told the governor, was this: Using billions in federal Medicaid dollars to buy private health insurance coverage for the state’s lowest income populations.

[…] The idea, first reported by Dave Ramsey at the Arkansas Times, would be to use federal Medicaid dollars to buy private insurance coverage for everyone below 133 percent of the federal poverty line (about $15,000 for an individual).

[…] What Arkansas is doing is using Medicaid dollars and sending people to the private health insurance exchanges, where they will shop for a plan like millions of other Americans expected to receive subsidies.

As it turns out this may be an effective selling point to conservatives in other states — increased government takeover coverage, but market-based. You know, kind of like the ACA’s state-based exchanges. Anyway, Wisconsin’s Gov. Scott Walker, though turning down the expansion, is instead offering a plan to cover low-income residents in a similar manner through state-subsidization of ACA exchange participants. Gov. Rick Scott of Florida just accepted the deal after receiving permission from HHS to have the state’s Medicaid program privately administered. Of course New Jersey Gov. probably didn’t help his chances at a CPAC invitation by also accepting. While we spent years hearing of the atrocity that was expanding healthcare access through the ACA to millions of Americans, some of those governors that actually have to deal with large numbers of uninsured are deciding it’s worth engaging with this substantial reform of an imperfect system.

This is a good thing, I think. It also strikes me as disingenuous on the part of conservative governors and pundits who decry the fiscal irresponsibility of federal health programs. One of the consequences of moving people in this way from public programs to private is that it exposes how much cheaper the public alternatives really are, and thus how it will cost more to privately expand — either to states or individuals. The real costs per beneficiary in Medicare has been far lower than private insurance, so some ideas to move seniors to private health coverage (by raising the eligibility age or the House GOP version of premium support) raises real concerns about cost-shifting and greater expense. Medicaid is even lower than both (PDF), which will make Arkansas’s decision more expensive in the long-run than simply taking the expansion in the first place.

These are not the reform ideas to pursue if your first priority is covering the most at the fewest cost. Instead, these proposals seem to reveal a preference bias for origin over price in whatever healthcare solutions exist. As was mentioned to me conservatives are probably comfortable with this bias, which is fine so much as it goes, and I don’t mean for this to be an attack on ideology. Rather, this is a criticism of the contradiction inherent in such words and actions; best exemplified in this case by refusing the Medicaid expansion because it will be too expensive, yet advancing private alternatives that will cost even more.

*Update: If you want the full wonk treatment on the Arkansas Medicaid plan go read the inexhaustible duo of Adrianna McIntrye and Karan Chhabra over at Project Millennial. One wrinkle they bring up that I didn’t think about; the privatized alternative to expanding traditional Medicaid will probably cost Arkansas more, but they won’t be the only one paying the extra cost (second emphasis mine):

Don’t forget who’s picking up the tab. So yes—the cost question is huge, not only in what it means for this deal’s legality, but also in what it means to all of us who don’t live in Arkansas. Odds are that includes you. If their plan costs the federal government more than it would’ve for Arkansas to expand Medicaid the old-fashioned way, well, that money has to come from somewhere. It comes from taxpayers, obviously, but the rub is that those taxpayers are all over the country, and the folks who benefit are those in Arkansas. In other words: if Mike Beebe’s plan costs more, we’re all paying for it.

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2 responses to “The Arkansas Medicaid plan

  1. Pingback: Michigan Senate passes Medicaid expansion bill (hello, Indiana?) | The McLean Parlor·

  2. Pingback: Michigan Senate passes Medicaid expansion bill (hello, Indiana?) | Punditocracy·

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