by David Ramsey
The House and Senate Public Health committees met today to hear updates on the “private option” plan for expanding healthcare coverage. Key Republican lawmakers — particularly Rep. John Burris, Sen. Jonathan Dismang, and Sen. David Sanders — have been working closely on an informal basis with the Department of Human Services and the Insurance Department to develop the policy details since the session ended, but frequent check-ins with other lawmakers are likely in the interim between sessions. Burris said he anticipates meeting on the plan at least on a monthly basis, and said there was a need for “legislative input…to make sure it’s implemented correctly.” He noted several times that a legislative supermajority approval for the appropriation will be needed each year. Should be fun!
DHS Director John Selig, Surgeon General Joe Thompson, and Exchange Director Cynthia Crone testified. After the jump, some of the policy details and lingering questions that emerged.
Timeline for the private option
State health officials are working on the waiver request to ask federal permission for the “private option,” which would use Medicaid dollars to buy private health insurance for low-income Arkansans on the healthcare exchange, a regulated marketplace. They expect to have a draft finished in June. It will then be open to public comment in July and sent to the feds for approval in August. They are hoping to get a response by October 1 (when open enrollment begins). Approval is highly likely, as communication has been frequent between federal and state officials and there don’t appear to be any major roadblocks.
Carriers on the exchange
The insurance department is currently expecting between 6 to 8 health-insurance carriers to apply to sell on the exchange, a potentially dramatic increase in competition for a state currently dominated by Blue Cross Blue Shield. (Insurance Commissioner Jay Bradford claimed in a phone interview earlier this month that this is around double the amount that would have applied without the additional number of customers gained via the “private option.”) Letters of intent are due June 3, with full applications due at the end of June. Plans must be approved and sent on to the feds by July 31. That gives the Insurance Department only one month to complete the approval process, an extremely compressed timeframe. Crone said that Arkansas had the latest deadlines in the country because they wanted to give carriers time to evaluate the "private option."
Worth noting that the two timelines above mean that carriers will have to decide whether they want to participate on the exchange before the state receives final approval for the "private option." Sounds like state officials are working hard to assure carriers, who will be taking at least a small gamble on this front. Crone argued that consumers are likely to stick with the plan that they choose in the first year, so carriers interested in the likely additional customer base will be motivated to get on the ground in Year One.
Two different portals
The electronic portal for the federal exchange — basically a website that will allow folks to enroll in a health insurance plan on the exchange — will not be usable for the expansion pool (people below 138 percent of the federal poverty level who will be newly eligible for insurance under the “private option”). This means DHS will have to create their own portal just for the Arkansas expansion pool. DHS officials acknowledge that this will be a difficult task but say it’s the sort of bump in the road they anticipated. A “private option” portal will be incorporated into the new electronic eligibility and enrollment system currently under development. DHS officials do not know what additional cost this will impose but expect that it will be covered under the additional administrative costs built into their overall estimates for the “private option.” The feds will pick up 90 percent of these admin costs. Cost aside, this could represent a significant hiccup for enrollment, as initially a substantial number of people will likely attempt to sign up on the federal portal only to find out that they need to switch to the separate portal for the Arkansas “private option.”
No competitive bidding
The expansion pool will be eligible for “silver” qualified healthcare plans (plans are rated bronze, silver, gold, or platinum based on the amount of coverage) and their premiums will be fully paid for by the government. Originally, part of the “private option” idea was that recipients would have to choose between, say, the two cheapest silver plans if they wanted the premiums fully subsidized. This would help drive down costs, as carriers would compete to be among the two cheapest.
Instead, people in the expansion pool will be able to pick any “silver” qualified plan. The "private option," at least in the first year, will not feature any form of competitive bidding between carriers. That means more choices, but it also means that the marketplace will have more than 200,000 customers who aren’t price sensitive at all when choosing a plan (remember, the government is picking up the tab, so there is no motivation for the consumer to skimp on premium price). That would tend to drive up costs and calls into question some of the bolder estimates about the impact of competition from DHS and lawmakers like Burris and Sanders. There are some mitigating factors: carriers will be competing on price for other non-expansion consumers in the marketplace, and the Insurance Department will be charged with conducting actuarial analyses and only approving plans with non-excessive prices (presumably extreme outliers wouldn’t get approved). Selig told me that they may employ competitive bidding down the road but that their main goal in the first year was to attract as many carriers as possible; he also said that initial costs for new carriers may be higher as they build up networks. DHS spokesperson Amy Webb said, “We do ultimately believe that the expansion will drive costs down. But the focus right now is making sure we have a healthy marketplace. What we do in the first year is not necessarily what we’ll do every year.”
As part of the Affordable Care Act, federally funded "guides" and "navigators" will be trained, licensed, and tasked with education and outreach to make sure that folks know they're eligible for coverage and understand the process of enrollment. The Insurance Department will work with 30 entities in the state — ranging from state agencies to private companies to local community organizations — to hire 637 guides (at $12 an hour) to help facilitate the Affordable Care Act enrollment process in every county in the state. Of these, 100 guides will be working on the "private option" expansion pool. Burris said multiple times that he believed this aspect of the ACA would be a disaster, and often jokes about the reception in Boone County awaiting government workers with clipboards knocking on strangers' doors. But the truth is that the effectiveness of guides will be a key to making the "private option" work. Most people in the expansion pool will be too low-income to fall under the federal mandate to buy insurance. If healthy people don't enroll because they find that signing up is a hassle, or confusing, or they don't realize they're eligible — that means an unhealthier marketplace (the dreaded "adverse selection"), which means higher prices. That's where the guides could be a difference maker, assuming they can survive Boone County. Either way, they're going to continue to be a political lightning rod, with multiple Republicans worrying about oversight and Rep. Kim Hammer fretting that one of the coordinating entities in his county — a not-for-profit focused on reproductive health and HIV prevention — might use the guides as a "backdoor approach" to advance their "interests and agenda."