The Government Accountability Office (GAO) reported last August that Arkansas's little experiment in paying for private insurance with Medicaid dollars cost $778 million more than if it had just stuck to using a "traditional Medicaid program". The introduction to the GAO report states:
Section 1115 of the Social Security Act authorizes the Secretary of the Department of Health and Human Services (HHS) to waive certain federal Medicaid requirements and allow costs that would not otherwise be eligible for federal matching funds for demonstration projects that promote the objectives of the Medicaid program. A significant and growing portion of federal Medicaid expenditures, which totaled $265 billion in fiscal year 2013, is for care provided under section 1115 demonstrations, which allow states to test and evaluate new approaches for delivering and financing Medicaid services. Under the Patient Protection and Affordable Care Act (PPACA), states may opt to expand their Medicaid programs by covering adults with incomes at or below 133 percent of the federal poverty level (FPL) under their state plan. In August 2013, Arkansas proposed an unprecedented alternative to this expansion under the authority of a section 1115 demonstration. In September 2013, HHS approved Arkansas’s demonstration proposal to expand its program by allowing federal Medicaid funds to be used to provide premium assistance to enable newly eligible beneficiaries to purchase private insurance offered through the state’s health insurance exchange. state of Arkansas, is the first of its kind testing the use of premium assistance in purchasing exchange coverage for a state’s entire Medicaid expansion population. ....The summary states:
HHS’s approval of $778 million dollars of hypothetical costs in the Arkansas demonstration spending limit and the department’s waiver of its cost-effectiveness requirement is further evidence of our long-standing concerns that HHS is approving demonstrations that may not be budget-neutral.... (Translation: It costs more money.)
In approving the demonstration, HHS did not ensure that the demonstration would be budget- neutral—that is, that the federal government would spend no more under the state’s demonstration than it would have spent without the demonstration. Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs—significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program—without requesting any data from the state to support the state’s assumptions. GAO estimated that, by including these costs, the 3-year, nearly $4.0 billion spending limit that HHS approved for the state’s demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services under the traditional Medicaid program....
Forbes reported in October:
As we have written before, Arkansas’ “Private Option” ObamaCare Medicaid expansion has been a disaster for taxpayers, patients and politicians alike. Costs have run over budget every single month since the program’s launch. The Medicaid director who spearheaded the program abruptly resigned to “pursue other opportunities.” The program’s chief legislative architect, a three-term Republican state representative, lost his primary for an open Senate seat to a political newcomer, despite a significant fundraising advantage. And it’s a disaster for patients as well: the ObamaCare expansion plan is already prioritizing coverage for able-bodied adults over care for truly needy patients like Chloe Jones.
News is so bad that Governor Beebe’s office is secretly trying to silence negative press about this ObamaCare experiment. And when that didn’t work, he prematurely leaked incomplete and misleading information. Now, the news for Arkansas – and indeed taxpayers everywhere – is getting even worse.
In August, the Government Accountability Office (GAO) released the findings of an internal audit conducted on Arkansas’ ObamaCare expansion.
The Obama administration violated its own budget neutrality protocols, at a cost of $778 million to federal taxpayers.
The Administration ignored the advice of its own actuaries who questioned the program’s costs. In addition, internal e-mails reveal that state officials knew the expansion would prove costly and unpredictable, but pushed forward anyway. Now Private Option costs are exploding and taxpayers everywhere are on the hook. Rest of Article. There is much more to read.
When the Beebe administration was lobbying for an expansion of Arkansas’ fee-for-service Medicaid system in 2012 and 2013, it estimated that the monthly cost of Medicaid expansion would be $325 per person. Early estimates of the Private Option pegged monthly costs at $437 per person, a 34 percent increase over the state’s fee-for-service Medicaid estimates, even after excluding the sickest 10 percent of patients from the Private Option.
But the state increased its monthly cost projections to $472 per person when it submitted its waiver in August 2013. By the time the federal government approved the waiver, the budget cap had increased to $477 per person. Even though these figures have pretty significant “hypothetical costs” added in, the state has still managed to run over budget with its ObamaCare expansion.
So far this year, monthly costs have averaged between $490 and $495 per person. This means that Arkansas is already significantly over its budget cap and on track to run $20 to $30 million over the cap this year.
Nearly $1 billion more for an experiment in one state.
Remember this little Mississippi food fight over the Arkansas plan two years ago?