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Regulation and Compliance > State Regulation

All eyes on Arkansas

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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.

This included rebuking Medicaid expansion and creation of the state-based exchange, Chaney noted in his presentation.

This set Bryant on a course of conflict with the independently elected Chaney.

As National Underwriter wrote in its coverage earlier this year of the fracas, Bryant argued that Chaney doesn’t have approval to authorize an exchange, at least without legislative and gubernatorial backing, according to press reports. And he has not gotten those. Without cooperation and coordination among state agencies, HHS had to deny Chaney’s request for the state exchange.

Bryant’s position appears from his letters to HHS, as reported, that the federal government will really be behind a state-based exchange and end up subsuming power, something he does not want in his state.

Bryant issued a screed against “Obamacare,” especially the potential Medicaid expansion, last July on his website, writing about his concern that the costs will be incurred by the state and are an enormous burden on all other resources, such as those used for education, public safety and job creation. And that’s just Mississippi.

Where other states stand

In Missouri, which has a Democratic governor like in Arkansas, and a Republican legislature that is “veto proof,” according to one health advocate there, Medicaid expansion did not pass. Although it has the same configuration as Arkansas, the branches of government failed to hash out a compromise.

In Louisiana, Governor Bobby Jindal issued on the state’s website a list of top reasons not to expand Medicaid, among them a perceived cost to Louisiana taxpayers of $1.7 billion over the first 10 years, and the perceived push of 248,000 people out of private coverage and into the Medicaid program.

Jindal and many others are wary of any partnership with Medicaid, calling it poorly run, inferior and antiquated. According to press reports, not much is expected from the Louisiana state legislature in terms of an innovative solution for Medicaid expansion this year. The governor’s office did not return press calls.

On May 7th, the American Medical Association and a host of other medical organizations wrote to CMS’ Mann, to express their support for a payment increase provision under PPACA and their increasingly concerned statement “that the brief time frame which states had to implement this provision has resulted in confusion both by state employees responsible for administering the program and the physician community. One overarching concern shared by our organizations is the lack of a coordinated plan to educate and communicate to eligible providers about the payment increase and steps physicians must take to participate. For example, we continue to hear reports from physicians having difficulty simply locating or accessing their state’s self-attestation form,” the doctors’ organization wrote.

Some are already worried that the federal government will give with one hand and then take back with another, as it did with the Prevention and Public Health Fund, which is now being used to train exchange navigators and for a public awareness media and enrollment campaign. The fund has stopped taking new applicants.  

CMS is not divulging the number of carriers who have signed up for the exchanges, in general. However, over in Iowa, Republican appointed Insurance Commissioner Nick Gerhart does not know who will be in the state’s exchange, which will be a hybrid federal-state partnership. As of May 1, at the time of an interview, no insurer had yet applied, but Gerhart, new to his post this year, said he had until the end of June and was making the rounds talking to companies.

Gerhart’s boss, Gov. Terry Branstad, was looking at a tax credit for those in the Medicaid expansion group through the state’s Healthy Iowa program. Like many Republican governors, he is opposed to outright Medicaid expansion. The state legislature is still meeting over the state budget. Many are rallying to expand Medicaid for the extended coverage of more than 60,000 Ioans and the cost savings for the state of over $163 million a year, according to Healthiest Iowa, an advocacy group.

The tax credit approach championed by Branstad would be a mix of federal and state/local money and more people would be eligible for a tax credit beyond the amount envisioned in the exchange, through the Medicaid expansion funds.

There are many ways to get those without employer-based coverage at certain levels above the FPL covered, according to Gerhart. “I can lay out seven or eight scenarios, that are all plausible, and I am probably missing four or five,” he said.

One thing he’s glad to see has actually happened after talks to HHS was the cutting down of the 21-page application to get on the exchange. It is now three pages. Ten pages is hard for even college-educated people to get done, he noted.

Another state that discussed the Arkansas model but did not have the magic mix required is Florida, where the legislature has already finished up for the year, unless it comes back in a special session. Florida is the cradle of outrage and legal challenges against PPACA, and much has been made of Gov. Rick Scott’s full court press against the Medicaid expansion.

The idea of integrating Medicaid expansion with the health insurance exchanges is an idea some states have considered, and even though the legislatures did not work it out this year, a number of states might look at it next year, according to Alan Weil, executive director of the National Academy for State Health Policy in Washington.

“I think that’s still a very viable option,” he said of future integration. Indeed the Medicaid expansion question does not die this year. Although Arkansas is the only state that has crafted a way, it is unclear if other states can have such mastery over all their mechanics.

The good news for those who want a solution is that next year is not too late, as Weil indicated, although many millions that could have been given to states in 2014 will now go elsewhere. The bad news is that any state looking to arrive at said solution must essentially thread the governor’s office, the state legislature, the industry and HHS through the eye of a needle. It is not just the governor’s and the industry’s support that is needed for a solution to the Medicaid expansion problem; we have seen that fail in Florida. Equally, it is not just the legislature’s and the insurance commissioner’s support that is needed; we have seen that fail in Mississippi.

Arkansas highlighted other failures as much as its own successes.

See also:

Traps face states that spurn Medicaid expansion money

Arkansas lawmakers approve $16.5M for exchange

Mapping the PPACA world for agents and brokers


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