Against all odds, Arkansas appears poised to move ahead with a plan that will bring private coverage to a population very close to the poverty level while defanging the controversial Medicaid expansion that is now viewed as an optional part of the Patient Protection and Affordable Care Act (PPACA).
The Arkansas solution became law toward the end of April after a few early fits and starts in the state legislature, when Arkansas Democratic Governor Mike Beebe signed a bill that would allow — if the federal government grants a waiver — those for whom the Medicaid expansion was intended to buy private health insurance through the Arkansas health insurance exchange or marketplace.
But the solution is not for everyone. It requires both chambers of a state legislature, the governor's office and its agencies to all work together to come up with a solution and then see if the U.S. Department of Health & Human Services (HHS) will let the idea fly. So far, no one but Arkansas has achieved this, and its work is not yet done.
The idea was "homegrown," said Arkansas Department of Human Services (DHS) Director John Selig. It came about because of necessity and the particular dynamics of the state and for this reason, although it has been held up as a model, it may prove too tricky for the politics of other states playing with alternatives to Medicaid expansion rather than outright rejecting it. The Arkansas marketplace or exchange will be federally run. The Medicaid expansion targets those who earn from 100 percent to 133 percent of the federal poverty level (FPL), which tops out at $15,282 for a single person. The measures kick in on January 1, 2014.
The Supreme Court's decision last June on PPACA allowed states to opt out of the law's Medicaid expansion, which many Republican states proceeded to do, with much vigor. "It really came about once the Roberts ruling came down," Selig said, referring to the June 2012 Chief Justice John Roberts 5-4 decision on PPACA, with its Medicaid expansion requirement in effect struck down. The governor supported expansion but to pass a spending bill in the state requires 75 percent or a supermajority, he explained.
That's a very high bar.
And many in the state Senate and House, which are both Republican for the first time since Reconstruction, ran for their seats opposing Obamacare, he noted.
But many realized early on the expansion would benefit a large number of citizens and in the 100 percent to 133 percent FPL population, if you don't do the expansion, you aren't eligible for subsidies, so the discussion evolved pretty quickly after that, Selig said, into the idea, "Well if we could put almost all of these people into the private market…"
The actual concept about serving some of these people through the private market came up before Beebe left for Washington on February 22 for the National Governors Association (NGA) conference. Some of the Republican leadership in the state first met with him. Then, in a meeting with HHS officials including the Secretary, Beebe made the request. Beebe said that the only way we are going to get expansion in Arkansas is through something novel, according to Selig.
"I've got to get something more creative that doesn't look like the standard Medicaid expansion approach," the Arkansas governor told HHS Secretary Kathleen Sebelius, Selig recounted. The Secretary "surprisingly said, 'Yes," that it was an interesting idea and she didn't see why HHS couldn't find a way to do this, he said.
A few weeks later, guidance was issued by the Centers for Medicare & Medicaid Services (CMS) answering questions for use by other states on the Arkansas solution. It is billed as a "premium assistance" program, not a partial expansion of Medicaid for the individual market. CMS noted in its Arkansas FAQ, known as the March 29 Premium Assistance FAQ that "Some states have expressed interest in section 1115 demonstrations to provide premium assistance for the purchase of QHP (qualified health plans) in the Exchange." Section 1115 refers to that section of the Social Security Act where the Secretary may approve demonstration projects that she determines promote the objectives of the Medicaid program.
CMS states that HHS will consider approving a limited number of premium assistance demonstrations.
Arkansas' DHS staff is working on a timetable for the necessary waiver, but we do not yet know when the waiver application will be submitted. There must still be a public comment period for the waiver, so May is out of the question in terms of a waiver submission. Advocates for the premium assistance solution, like Selig, believe it is better for consumers while satisfying politicians who do not want to expand a federal program. The consumers will have better access to care with a private insurance card rather than a Medicaid card, Selig said, echoing what many states think of the Medicaid program access.
Moreover, it will attract new carriers to the market, Selig hopes. The industry has been supportive of expansion all along and now there seems to be a number of carriers interested, he said. The 100 percent to 133 percent FPL are not the Medicaid frail, Selig pointed out. These 250,000 or so individuals that will now get to go on the exchange, if HHS approves Arkansas' law, to buy private insurance tend to be relatively young and healthy. The Medicaid frail will stay in the Medicaid program and not go into the private sector because they need more comprehensive care than the essential benefits package, according to Selig.
However, that is merely what they say — it remains to be seen which insurers sign up, of course.
Director of Center for Medicaid and CHIP Services Cindy Mann has stated in other guidance that, as it considers waiver proposals, HHS will consider factors that will impact cost effectiveness, such as those introduced by the creation of the exchanges. "We remain committed to working with states and providing them with the flexibility and resources they need to build new systems of health coverage. Premium assistance is simply one option and we will continue to work with states on solutions that work best to meet shared goals," she stated on behalf of CMS in late March. HHS can and does deny waivers on such things as medical loss ratios. Recently, the group denied Oklahoma's request on Medicaid expansion for 9,000 people because Insure Oklahoma's program includes enrollment caps, contravening PPACA, although there is no reason to think that might happen with Arkansas.
According to the The Advisory Board Company, a global research, technology and consulting firm, only three states are now pursuing an alternative model for Medicaid expansion. They are Arkansas, Indiana and Tennessee. Fifteen states are not participating, 26 states are expanding Medicaid outright and the six others are on the fence.
The state of the Mississippi exchange
Arkansas' plan may indeed be homegrown, but Mississippi Insurance Commissioner Mike Chaney wanted to use that option for signing up Mississippi individuals that were in the top of the FPL range and who would normally be eligible for Medicaid.
"HHS gave us approval to do this if we ran a state-based exchange, "Chaney said. However, on February 8, CMS arm Center for Consumer Information and Insurance Oversight (CCIIO) denied "Mississippi the ability to operate a state-based exchange, due to the state Governor's threats of a lawsuit," said Chaney, mentioning the end of a bruising insurance exchange battle between the Republican governor and the elected Republican insurance commissioner. The plan would save about $3,000 per person put on the exchange for the state, for a savings of $180 million per year, Chaney said.
Republican Governor Phil Bryant wanted no part of a state-based exchange that would be seen as endorsing PPACA in any way, while Chaney worked to get a state exchange, called OneMississippi, up and running. Previous Governor Haley Barbour and Chaney had decided to go forward starting in 2010 and into 2011 with a state-based exchange and had recognized the authority for the insurance commissioner to be in charge.
By January 2012, with Bryant now in the governor's office, further work was done to help implement the exchange's structure, according to a slide presentation by Chaney at the Mississippi Exchange Advisory Board and Exchange Advisory Subcommittees which were set up with no objection raised by the new governor.
However, according to Chaney's timetable, after the June 28 Supreme Court decision, the Mississippi Tea Party and other groups began actively opposing the exchange and Bryant started trying to frustrate the exchange's efforts.
At the Republican Governors Association meeting in Las Vegas in November 2012, the governors left with solidarity for en masse resistance to PPACA as the last and best option.
