Becky Gillette – The issue of the special session starting April 13 regarding funding for the Private Option Medicaid program is not only about lower income people losing access to affordable healthcare, there could also be a huge hit on the state’s budget. Some of those on the Private Option would quality for traditional Medicaid, and that requires a bigger spending match with the state paying for 30 percent of the care.
It also could impact the health of hospitals in the state, which are often the largest employer in that town or county paying some of the highest salaries. Robert “Bo” Ryall, president and CEO of the Arkansas Hospital Association, said the problem is particularly acute because the Affordable Care Act (ACA) mandates huge reductions in Medicare reimbursements for hospitals representing a loss of $2.5 billion for state hospitals over a 10-year period.
Ryall said uncompensated care costs for hospitals in Arkansas were $380 million per year prior to the Private Option, which reduced the uncompensated care costs $149 million from 2013 to 2014. Before the Medicaid expansion, some hospitals were in financial difficulty and experiencing layoffs.
“Since then jobs have been added and hospitals have stabilized,” Ryall said. “It has obviously been good for hospitals.”
Legislators opposed to the Private Option, renamed Arkansas Works by Gov. Asa Hutchinson, program have stated the state’s share of costs for Medicaid will grow in the future to the point of being a major strain on the state’s budget. In 2017 the state has to start paying a five percent share with that increasing to 10 percent by 2021.
But Ryall said ending the program now would be a huge detriment to the state’s budget.
“There is a benefit of $757 million to the state budget from 2017 to 2021 even with paying the state match over that period,” Ryall said. “This also sustains employment at hospitals, which are often the largest employer in the area where they are located.”
Hutchinson, who favors continuing the Private Option, has said ending the program would result in a state budget gap of $100 million per year. Rep. Bob Ballinger has doubts about the alleged budget gap, and said he has seen predictions closer to $60 million. Sen. Bryan King also questions the budget impact predictions.
“What is really going on is the reality that there is a spending problem at the Department of Human Services,” King said. “They are trying to say if you don’t vote for this, it will hurt all state government. Are there issues and challenges to doing away with the program? Yes, there are. It is like a cue ball. You hit this one ball and it hits all the other balls, and it will hurt the state budget. DHS is badly managed. It had a $60-million system to re-verify Private Option enrollees that never worked. Now they are saying they need another $200 million and no guarantees it is going to work. DHS is not a train wreck; it has gone off the cliff.”
King said the hospital association hasn’t been accurate on their predictions.
“One thing they said was the emergency room use was going down,” King said. “But people covered by the Private Option have five times the use of emergency rooms than the normal population.”
King also alleged widespread fraud with the Medicaid expansion. He said 20,000 of the people enrolled don’t even live in Arkansas.
“There are dead people on this program,” he said. “There are people all over the U.S. on this program.”
The entire reason the Private Option was adopted in Arkansas is that conservative Republican legislators weren’t going to support the Medicaid expansion because of their opposition to the Obamacare. But King said the Private Option costs hundreds of million more than if the state had expanded regular Medicaid instead of going through private insurers.
Ballinger sees major flaws with the program that he said has been a huge boon to private insurance companies.
“The Private Option is a perfect picture of crony capitalism,” Ballinger said. “It is taking future taxpayers’ dollars and paying into a program so the CEOs of Blue Cross and Blue Shield can keep $10-million salaries. We have totally strengthened their hand and now they are a $1.7-billion stronger monopoly of healthcare in Arkansas.”
Ballinger also said states that didn’t do the Private Option or the Medicaid expansion are doing well.
“My point is people are not dying on the streets in those places,” Ballinger said. “The economy is booming in Texas. If we could have the same economy as Texas, I would embrace it with both arms.”