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Conservative twists to private option

Some Stephen Group's ideas would require federal OK.


CONSULTANTS: John Stephen of The Stephen Group meets with legislative task force.
  • CONSULTANTS: John Stephen of The Stephen Group meets with legislative task force.

Medicaid expansion through the private option should continue, a consultant hired by the state's Health Reform Legislative Task Force recommended last week, but could be altered in a way more palatable to Republicans in the legislature.

The nearly 500-page report from the Stephen Group (TSG) suggested policy tweaks to encourage better health practices for beneficiaries and push unemployed beneficiaries to look for jobs. These changes, which could include imposing premiums on very poor beneficiaries and a punitive six-month coverage "lockout" on those who fail to pay, may be necessary to gather support from the private option's conservative critics in the legislature. However, they risk adding layers of administrative complexity and creating additional hurdles and barriers that could threaten access to care for beneficiaries.

The private option uses Medicaid funds available via the federal Affordable Care Act to purchase private health insurance for more than 200,000 low-income Arkansans. The policy is set to save more than $400 million in the state's coffers between 2017 and 2021, TSG found in its report. Over the same 2017-2021 period, TSG also projected that the private option would add $3.2 billion to the state GDP, support more than 6,000 jobs, and save hospitals $1.1 billion in uncompensated care.

Despite these benefits, the fact that the policy is funded by the ACA (better known as Obamacare) has made the private option a consistent source of controversy in the legislature. With Gov. Asa Hutchinson's backing, the legislature agreed to fund the policy for two years and create the task force to look for solutions going forward. To continue in 2017 and beyond, the private option needs the support of three-fourths of the legislature, a tough slog given that most of the state's legislators are rabid Obamacare haters.

Many of TSG's recommendations for the future of the private option seemed geared toward GOP lawmakers who might be skeptical of the policy. Some legislators expressed concerns or ideas regarding "personal responsibility" and "a ladder of opportunity," TSG's managing partner John Stephen said.

TSG even had a re-branding suggestion, calling for its proposed tweaked version of the private option to be dubbed the Transitional Health Insurance Program (or T-HIP). Whatever it's called (we'll stick with "the private option" for this article since there are enough acronyms in health policy as it is), the framework keeps the Obamacare-funded coverage expansion in place. 

The most significant recommended change from TSG would be a carrot-and-stick approach attempting to push beneficiaries toward certain practices for wellness and preventative care, as well as job training programs for those who are unemployed or underemployed. Beneficiaries would sign a membership agreement that would require the beneficiary to visit a primary care physician within six months of signing and to comply with follow-up instructions. For those who work less than 20 hours a week, the membership agreement would also require participation in job training or work referral programs (note that this "work encouragement" would not require beneficiaries to have a job in order to keep coverage, which the federal government has been clear it will not allow).

The carrot would be dental and vision benefits, which currently are not offered under the private option. TSG suggests adding them, but only for beneficiaries who comply with the membership agreement. The stick? If beneficiaries fail to comply, they would be assessed monthly premiums. TSG is vague on just how much these premiums would be, but they would likely be in the $5 to $20 range. And if beneficiaries fail to pay premiums they're assessed, they would not only be kicked off of coverage, but subject to a punitive six-month "lockout" period — they would not be able to re-apply and restore coverage.

Other recommendations from TSG:

Assess $20 co-payments for use of the ER in non-emergencies. Failure to pay would be subject to the six-month lockout mentioned above. 

Create a Wellness Report Card for each beneficiary, which would track critical health factors, like primary care physician visits, flu shots, etc.

Improve the eligibility verification and redetermination processes.

An asset test that would impose a monthly premium of $100 or more for beneficiaries with a house worth more than $200,000 or cash-equivalent assets of $50,000 or more. 

End the Healthcare Independence Account program. This program, newly implemented this year, established what are essentially Health Savings Accounts for beneficiaries, but attracted little participation. TSG's take: "Acknowledge when things don't work."

Establish publicly available health scorecards and rating systems to analyze how well the private option (and the insurance carriers) are doing in terms of wellness and prevention. 

Require health insurance companies to offer education about the "appropriate and proper use of health care," in part to steer people away from excessive emergency room visits.

Improve care coordination for the medically frail.

Use existing programs to fund premium assistance to employees offered employer-sponsored coverage, so they are more likely to get insurance from their job instead of moving to the private option.

Offer employer support. Give a one-time payment of $1,000 to businesses that offer employer-sponsored insurance and hire people who are currently private option beneficiaries. 

Eliminate 90-day retroactive eligibility. Right now, people are covered for health services incurred in the three-month period prior to signing up. TSG suggests eliminating that benefit, so coverage would start at signup.

Many of TSG's recommendations would require the federal government to approve waivers of Medicaid rules in order to implement. Still, TSG argued that the recommendations were doable under the current presidential administration, categorizing them as "in the box solutions."

Joan Alker, executive director of Georgetown University's Center for Children and Families and an expert on Medicaid waivers, said that some of TSG's suggestions could face tough scrutiny from the feds. The work encouragement tied to premiums, the six-month lockout and the asset test could be tough asks, she said — as well as the fact that the overall system could kick people below the poverty line off insurance.

That said, TSG's recommendations generally "are in the ballpark of the kinds of things [the feds] have been negotiating," Alker said. "If both sides recognize it's not going to come out the exact way it comes in, I think on most of those issues, they will find a way to square the circle."

That doesn't mean it's good policy, she said. "The fundamental question remains about the administrative complexity of coming up with all of these pieces and moving parts and whether they achieve their objectives," Alker said, and expressed skepticism that something like a lockout or an asset test was compatible with the goals of the Medicaid program at all. "The main risk is creating barriers for beneficiaries and creating additional bureaucracy."  

In addition to these "in the box" solutions, TSG also suggested more radical "out of the box" ideas, proposals that the Obama administration would surely reject but that a future Republican administration might entertain. These included work requirements (mandating that beneficiaries work at least 20 hours a week in order to stay on the program); sliding scale premiums imposed on beneficiaries (as opposed to premiums imposed only on those who don't follow the membership agreement); and a limit to how long someone can remain covered by the program (a maximum in the range of two to five years, after which the beneficiary would be kicked off of coverage).

Even under a Republican administration, some of these ideas might face legal challenges, Alker said.

"At the end of the day, [these proposals] involve the government making certain assumptions about you and your choices," she added. "That's something a lot of the proponents need to think about."

They also might undermine goals that policymakers on both sides want, she said. "Yes, it's better if people work," she said. "We can all agree on that. But I would argue that having continuous health coverage makes you more likely to be able to work, not less."

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