by David Ramsey
***UPDATE: Just now, Sen. Dismang was grilling Surgeon General Joe Thompson in the Public Health committee meeting on the 100-138 group. He didn't explicitly mention the idea outlined below, but focused on the 100-138 group for the same reasons: if we expand, they will be covered by Medicaid; if we don't, they'll go to the exchange. Dismang arguing that the exchange will mean higher reimbursements for hospitals and, more dubiously, that people would prefer to be able to buy subsidized insurance on exchange. (He didn't say this, but would also be more profits for insurance companies.) He said people should be able to buy subsidized private insurance (hmmm...what was his position on Obamacare?) but by moving the 100-138 group to Medicaid we "take that right away." Dr. Thompson's response: whatever you think the optimal policy for the 100 to 138 group is, feds say it's all or nothing.***
Despite the fact that the feds have said no, “partial expansion” remains an idea we keep hearing from Republican lawmakers as the legislature considers the Medicaid expansion question.
When I spoke with Sen. Jonathan Dismang (R-Beebe) earlier this week, he reiterated that there was no way that he could support full expansion, but said that partial expansion—establishing a lower eligibility threshold for Medicaid expansion than 138 percent of the federal poverty level (FPL), the line established by the Affordable Care Act—was “definitely something that needs to be considered.” He was at pains to make clear that he wasn’t ready to support a partial expansion outright, but said it was “an idea that seems more reasonable than the full expansion being pushed by the Administration.”
Dismang had a twist that’s new to me—perhaps the state could pick up the tab for the reduced premiums low-income citizens between 100 and 138 FPL would have to pay on the exchange if they remained ineligible for Medicaid. (Dismang said he has not yet discussed this idea with other members.)
Here’s how this would work. The most common form of the partial expansion idea has Arkansas expanding Medicaid only up to 100 percent of the FPL. The group between 100 and 138 of FPL would then be able to buy federally subsidized insurance on the exchange. For example, with no expansion, an individual making 138 percent of FPL (a little more than $15,000 a year) would pay $26 per month out of pocket for a subsidized health-insurance plan bought on the exchange. (The feds pay the rest.)
Dismang floats the notion of the state paying that $26 a month, subsidizing the remaining bit that the feds don’t. He figures that if the average Medicaid recipient costs the program more than $5,000 a year, that’s a cost of more than $500 for the average recipient once the state has to pay 10 percent starting in 2020. The yearly premiums, after federal subsidies, for folks between 100 and 138 FPL would typically be less than that, so the state might be able to save money paying that instead. And in theory, such a plan could cover everyone that expansion would.
“The [after-subsidy premiums] would potentially be less than what we would be paying for the future expansion at 10 percent,” he said. “So that’s just something we need to consider. I’m not advocating for or against…but at this stage in the game, we’re putting everything we can on the table.”
In addition to the attempt to save money for the state, the idea appeals to Dismang because he believes that low-income folks would get a better insurance plan from private insurance than they would from Medicaid, and hospitals would get better reimbursement rates.
The downside: while Dismang may well be correct that the idea would save money in 2020 and beyond, when Arkansas would have to start chipping in 10 percent of the costs of Medicaid expansion, such a plan would cost the state a lot more between now and then. Even if you could cleanly shift costs in 2020 from expansion to state subsidies on the exchange, it’s not clear where that money would come from between, say, 2014 and 2016. There’s also the issue of the administrative costs of the state issuing their own subsidies, and the potential for screwy economic incentives if double subsidies are available for the narrow class of people between 100 and 138 of FPL.
So this one may or may not have legs, but it’s the kind of compromise-hunting that has led to some optimism about the possibility of an eventual deal. As John Brummett, who predicts that partial expansion will be the final agreement, tweeted last week, “the expansion hesitance is now less basically conceptual and more process-driven.”
But the trouble with partial expansion emerging as a possible compromise is that there is still no sign that the feds are putting that on the table. Yes, Gov. Mike Beebe is willing to ask HHS if they will budge, but the governor hasn’t received any indication that they will.
“What we’ve gotten from them was pretty definitive,” Matt DeCample, the governor's spokesman, said in a phone interview yesterday. “But it never hurts to ask.”
DeCample said they have been in touch with HHS Secretary Kathleen Sebelius and are hoping to meet with her when they are in Washington in February, but there is “nothing definite” set up—it will depend on whether schedules align.
Okay, certainly worth a shot, but all we have here is a tentative meeting and, according to DeCample, “no indication at this point that there is going to be any flexibility.” If some form of partial expansion becomes the popular compromise position, what happens if it’s not even an option? After Beebe’s mention of a possible Sebelius meeting, Sen. David Sanders (R-Little Rock) said on Talk Business Arkansas that “time has brought us the possibility, maybe the glimmer of hope” of partial expansion, when in fact nothing has changed. If that glimmer turns out to be nothing, will it be lights out for expansion? Tough question for the expand-o-meter.