Kaiser Foundation Report Praises Arkansas’ Private Option

Arkansas’ private option has reduced the state’s uninsured ranks, reduced uncompensated care, and strengthened the overall insurance marketplace serving other insurance recipients, a new report from the Kaiser Family Foundation says.

The report, released on Wednesday, drew on data and on interviews conducted in April and May with state officials, medical providers, insurance carriers and advocates. The foundation analyzes national and global health policies.

To implement the private option, Arkansas became the nation’s first state to obtain a waiver to expand the Medicaid population by using Medicaid funds to purchase private insurance. Childless adults making up to 138% of the federal poverty level and parents with incomes between 17-138% are eligible.

As a result, the state, which had one of the highest uninsured rates, cut its uninsured, non-elderly adult population from 27.5% to 15.6%, the report said. The report called this the second biggest percentage cut in the nation. Gallup recently said Arkansas’ current number is 9.1% and said the state is leading the nation in reducing its percentage of uninsured.

“The marked increase in coverage in Arkansas occurred despite limits on funding for outreach and enrollment, eligibility computer system issues, and confusion among some beneficiaries about where to seek enrollment assistance,” the Kaiser report said.

The private option was adopted by lawmakers in 2013 and was reauthorized in 2014 after a protracted political fight. This year, legislators and Gov. Asa Hutchinson agreed to fund the private option through 2016 while a task force considers changes to it in the context of overall health care reform.

Opponents say the private option is an unsustainable expansion of Obamacare that is contributing to the national debt and which Arkansas cannot afford. While the federal government is paying virtually the entire cost now, the state begins paying part of the cost in 2017 and will pay for 10% in 2020.

The Kaiser report said that, under the private option, many patients are able to access care for the first time, and that hospitals saw a 55% decrease in uncompensated care costs.

The report said the private option increased enrollment in Arkansas’ Marketplace, which serves individuals who purchase health insurance on their own and through small businesses. Almost 80% of Arkansans enrolled in the marketplace are on the private option. The private option has resulted in an additional 220,000 people using the Arkansas Marketplace, raising enrollment from 54,000 to 273,000, the report said.

That’s as of June 2015, before the state began terminating private option recipients because of questions over income eligibility. The Arkansas Democrat-Gazette reported Aug. 21 that 58,423 Medicaid recipients, many of them covered by the private option, have lost their insurance or been informed they are losing their insurance. However, some of those are in the process of being reinstated.

The report said the private option has helped increase the number of statewide insurance carriers in the marketplace from two in 2014 to as many as six in 2016 while creating a younger and healthier risk pool and contributing to an average 2% premium drop on marketplace plans between 2014 and 2015.

The Arkansas Insurance Department announced Tuesday that it has approved rate requests in three plans: Arkansas Blue Cross and Blue Shield’s individual and group plans and Ambetter’s individual plan; and approved a decrease of 8.2% in Qualchoice’s individual plans. The rates for what insurance companies will charge under the rate increases and decreases was not disclosed by Insurance Department officials.

The report said the private option will meet budget neutrality requirements that were part of the waiver and that it has saved the state more than $88 million and generated new revenue of $29.7 million in fiscal year 2015.

It said the private option has been more complex to implement administratively than simply expanding Medicaid, as some other states have done. Before the private option, Arkansas covered through Medicaid only those parents with incomes below 17% of the federal poverty line, which is $3,145 per year for a family of three in 2015, and provided no coverage to childless adults without disabilities.

“Implementation of the private option has required unprecedented levels of cooperation between the state Medicaid agency and state insurance department and an enormous amount of time and effort on the part of the state’s leadership,” the report said.

The report said that Arkansas’ experiences could help other states combine their Medicaid programs with their marketplaces, though in some cases, a program like the private option may not work.

“However, even in these states, the Arkansas experience highlights the considerable flexibility available to design an extension of coverage to newly eligible adults consistent with a state’s delivery system, political culture, and larger health care goals,” the report said.

The entire brief can be downloaded here.