Private Option Numbers Rise 55,000, Legislator Says ‘Hard Look’ Needed

File photo of state Sen. Bart Hester, speaking at a Marco Rubio for president rally in February.
Credit Michael Hibblen / KUAR News

The number of private option recipients whose insurance premiums are being paid by the program reached 258,161 in July, up 55,000 more than in January.

The number was 213,026 in January. In June, 250,885 were on the program, according to a letter and information sent to Gov. Asa Hutchinson by Department of Human Services director Cindy Gillespie Aug. 17.

Counting 49,717 so-called “medically frail” patients, the total number of recipients receiving benefits as a result of the program is 307,878, an increase from the June total of 301,793 and the January total of 267,826. Medically frail patients are enrolled through the private option but then moved into the regular Medicaid rolls.

The private option is the state program that uses federal Medicaid dollars through the Affordable Care Act, otherwise known as Obamacare, to purchase private health insurance for Arkansans with incomes up to 138% of the federal poverty level. Medicaid is the federal government’s health care program for the blind, the disabled and the aged. The federal government is paying almost all of the program’s costs until 2017, when the state begins paying 5%, a number that rises to 10% in 2020.

The state is seeking a waiver from the federal government’s Centers for Medicare & Medicaid Services to continue the program with a new name, Arkansas Works.

The total average cost per recipient in July was $496.69, a decrease from $497.26 in June and $503.14 in January. In July, those costs included insurance premiums of $358.96 per person; cost-sharing reduction payments of $133.58 per person, and wraparound costs of $4.16 each. Cost-sharing reductions offset the costs recipients otherwise would bear personally. Wraparound costs cover supplemental services such as transportation. Under the terms of the existing CMS waiver, the program in 2016 must cost no more than $523.58 per person.

The private option barely mustered the required three-fourths votes for funding when it was created in 2013 and has faced significant opposition ever since. Earlier this year, it survived a special session and a fiscal session only after significant legislative maneuvering.

Sen. Bart Hester, R-Cave Springs, a longtime opponent of the program, wrote in a text upon hearing the numbers, “This program is what every Medicaid program to ever exist is: over budget, over enrollment, unaffordable, and detrimental to all other budgets of the state.”

Asked if another legislative battle looms when the Legislature meets in regular session starting in January, Hester texted, “With #’s like these and continued inability to manage the program the legislature will have no choice but take a hard look at how we move forward.”

Sen. Jim Hendren, R-Gravette, who originally opposed the private option but in 2015 helped craft the legislation that kept it going, said costs look OK for the coming year and that the numbers, while larger than expected, are not that far from the original estimates.

He’s more concerned about requests by insurance companies to raise premiums that could raise costs above the waiver limit. Or they could leave the market, “which is obviously going to potentially put (the program) into a spiral that causes it to spin out of control,” he said.

“I don’t see a huge risk to the state budget this year, but I think there could not be much clearer writing on the wall … that this thing is on a trajectory that is going to cause grave damage to the insurance market and to the fixed state budget,” he said.

Hendren said he doesn’t expect a big fight in the Legislature in January. However, a fight might come before the 2018 fiscal session if the state is over the budget cap.