Jackson Jambalaya

Arkansas tries to get a handle on Medicaid expansion through.... state-run health insurance exchanges. Columnist Avik Roy writes in the left-wing commie rag Forbes:

"In late February, Arkansas Governor Mike Beebe (D.) announced that he had struck a deal with the Obama administration to implement Obamacare’s expansion of health insurance coverage using the law’s subsidized private-sector insurance exchanges, instead of using the 1965-vintage Medicaid program. If implemented, this deal would result in far better health coverage for the poor. But the Congressional Budget Office has estimated that such coverage would cost federal taxpayers 50 percent more than Medicaid would. Yesterday, the Arkansas Department of Human Services released its own fiscal estimate of exchange expansion. Contrary to CBO, the state estimates that expanding the exchanges “would add less than 15% to federal health-care costs in Arkansas,” adding that “in some realistic scenarios, there could be no additional federal costs at all.”....

Given Medicaid’s devastatingly poor outcomes, and the potential for far superior coverage through private insurers, many conservatives—myself included—were encouraged by this development. However, the Congressional Budget Office has estimated that, on average, coverage under the exchanges would cost $9,000 per person per year, compared to $6,000 under Medicaid. Hence, if every state sought the same deal that Arkansas has apparently achieved, Obamacare’s costs could increase by trillions of dollars.

The Arkansas Department of Human Services, however, came to a different estimate than the CBO did. DHS hired Optumas, an actuarial consulting firm, and worked with legal consultants and the Arkansas Insurance Department to come up with an Arkansas-specific estimate of the fiscal cost of expanding the exchanges instead of Medicaid. “These Arkansas estimates,” writes DHS in a memo, “are less than one-third of the Congressional Budget Office cost estimate widely cited in press accounts.”

DHS cites three principal differences between their estimates and CBO’s. First, the CBO only estimated the cost of expanding exchanges to adults between 100 and 138 percent of the federal poverty level, compared to the 0-138 percent expansion envisioned in Arkansas.

Second, expanding the exchanges instead of Medicaid would result in a “market transformation” that would double the risk pool in the exchanges, improving the market power of exchange plans, while increasing competition among the plans to provide a cost-efficient service.

Third, the CBO estimate assumed a wide gap between Medicaid’s payments to doctors and hospitals, relative to those from exchange-based plans. DHS estimates that the actual difference in Arkansas is less than 25 percent, much narrower than the national average.

DHS’ actuarial review found that the difference between commercial and Medicaid reimbursement rates in Arkansas was currently “less than 25%.” Adding in a 5 percent discount for the fact that exchange reimbursement rates will be lower than traiditional commercial rates, and another 5 percent discount for the fact that the consumer-driven nature of the exchanges would drive prices down another 5 percent, DHS gets to a fiscal premium of 13-14 percent for the exchanges relative to Medicaid.

There can be little doubt that private insurers in the exchanges would provide far superior coverage to the poor than Medicaid would. The biggest roadblock to expanding the exchanges has been their significantly higher fiscal cost. If the new Arkansas analysis is sound, however, that concern could be alleviated in dozens of states that are currently on the fence, especially those states in which Medicaid reimbursement rates are closer to those of private insurers.

Indeed, there are 23 states with higher Medicaid reimbursement rates (relative to Medicare’s) than Arkansas, when it comes to overall physician services: Georgia, Virginia, Oregon, Louisiana, South Carolina, Washington, Kansas, Vermont, North Carolina, South Dakota, Iowa, Connecticut, Delaware, Oklahoma, Nebraska, North Dakota, Idaho, Montana, Nevada, Arizona, New Mexico, Alaska, and Wyoming. In these states, and also in eight states slightly below Arkansas in reimbursement rates—Alabama, Massachusetts, Mississippi, Maryland, Colorado, Kentucky, Wisconsin, and West Virginia—expanding Medicaid via the exchanges might be a truly realistic and cost-effective option.

It may be, however, that the Arkansas analysis contains flawed or inadequate assumptions. We’ll know more if DHS releases its full analysis..." Article

David Ramsey (no, not that David Ramsey) analyzed the proposal more thoroughly in the Arkansas Times. Article.

Summary of proposal released by Arkansas DHS

Might be nice to try this idea here in Mississippi. Oops, I forgot. Phil and the gang made that impossible. Never mind.