Arkansas became the first state to be allowed to purchase private health insurance for its poorest citizens with federal Medicaid expansion money. This was permitted despite the fact that Medicaid is much more cost-effective than private insurance. The Congressional Budget Office has estimated that providing coverage to the uninsured would cost about $6,000 yearly per person under the Medicaid program while health insurance purchased on the exchange would cost about $9,000 per person.
Representatives of the Urban Institute and the Center on Budget and Policy Priorities testified in a House subcommittee meeting that Medicaid "provides acute health care coverage at a cost of 27 percent less per child, and 20 percent less per non-elderly adult, than private coverage." A report by the National Bureau of Economic Research found that people covered by Medicaid are more likely to go to the doctor regularly, have reduced financial stress and generally report feeling happier and healthier than those who are uninsured and go without health care or those who depend on free clinics or emergency rooms to access care.
So far, the Department of Health and Human Services has approved premium assistance plans in only Arkansas and Ohio. The Private Option as it is called in Arkansas is a compromise that provides some measure of face-saving for conservatives who oppose Obamacare but still want to accept millions of dollars in Medicaid money from the federal government.
Conservatives get the pleasure of funneling government money to private insurance companies while the Obama administration gets the opportunity to extend health coverage to poor uninsured Arkansans who would otherwise be denied the Medicaid expansion. Miami of Ohio political science professor Bryan Marshall explained the appeal of accepting Medicaid expansion in this fashion: "Economically, it’s such a good deal, it’s hard to turn the money down. That’s why you’ve seen more and more Republican governors coming on board. But they’re going to try to find any daylight they can between this federal money and embracing Obamacare because conservatives are very much against Obamacare."
In April of 2013 the Private Option narrowly passed the Arkansas House and Senate, with only one vote to spare in the Senate. A three-fourths vote of both chambers of the legislature during the fiscal session that convenes Feb.10 is necessary to reauthorize the $915 million in federal funding for the program. That re-authorization is now very much in doubt because of a recent special election to replace Sen. Paul Bookout who resigned because of his misuse of campaign funds. Bookout voted for the Private Option but his replacement, Republican John Cooper is an avowed opponent. To further complicate matters, Sen. Missy Irvin R-Mountain View, who voted for the Private Option last year has announced that she intends to vote against reauthorizing the program because it is "leading us in the wrong direction."
Following an appearance before a Joint Budget Committee hearing, Department of Human Services Director John Selig told reporters: "The state budget was built on the assumption of the Private Option being in place … We don’t have a Plan B because we don’t know how much funding we have and how much savings we have until they’ve made some decisions."
Selig told the budget committee that the Private Option is expected to save the state $89 million in the next fiscal year and more than $600 million between now and 2021. Much of the savings would come from moving 200,000 Arkansans from the traditional Medicaid program, for which the state pays 30 percent of the costs, to the Private Option, for which the state pays nothing for three years before its share eventually increases to 10 percent.
Selig also said that under the Private Option the state could recover a portion of the $100 million it now pays each year to hospitals to cover uncompensated care.
Nearly 85,000 people have already signed up for the Private Option and tens of thousands more are eligible. Most of these people will lose coverage if the Private Option is not reauthorized. There is another category of vulnerable people that will be harmed even more, as pointed out by Medicaid Director Andy Allison. "Those individuals who have been determined medically frail, they are served through the traditional Medicaid program because Medicaid offers more services than private coverage, but their eligibility for coverage at all is established through the Healthcare Independence Act (which created the Private Option), so if the Healthcare Independence Act goes away, their coverage goes away entirely."
Gov. Mike Beebe has warned of the terrible consequences of Arkansas losing the Private Option: "While the benefits to our people, hospitals and communities are clear, ideological differences will again make it a close vote. If the Private Option fails, many Arkansans will lose their healthcare, and tough cuts will need to be decided for other state services, as well."
In our area, Reps. Fite, Douglas and Deffenbaugh have previously voted against the Private Option. Viewed from either a financial or humanitarian perspective, that would seem to be a hard vote to justify. They should reconsider the impact of their next vote on their poorest constituents. If they still vote to reject federal funding for this program, they owe an explanation to the many people who will be harmed by that vote.