LITTLE ROCK - Enrollment in Arkansas’ expanded Medicaid program has exceeded projections, and state elected officials have varying views on what that means.
In a monthly report released Tuesday, the state Department of Human Services said enrollment had reached 307,878 at the end of July, despite the agency’s prediction when the expansion program launched in 2013 that maximum enrollment would be about 250,000.
“When we did these estimates, that was nearly three years ago,” DHS spokeswoman Brandi Hinkle said Friday. “It was a brand new program that we were building from the ground up. We used good information from Census data, but that changes and we just were not able to pinpoint the number. We used the best estimate that we could.”
The program, which has been commonly known as the private option, was conceived as an alternative to the expansion of Medicaid rolls envisioned in the federal Affordable Care Act. It uses Medicaid money to subsidize private health insurance for Arkansans earning up to 138 percent of the federal poverty level.
The federal government is paying 100 percent of the program’s costs now, but starting in 2017 the state will be responsible for 5 percent of the cost. The state’s share of the cost will increase gradually to a maximum of 10 percent in 2020.
Earlier this year, the state Legislature approved Gov. Asa Hutchinson’s plan to rename the program Arkansas Works and add features such as referral to voluntary work training for unemployed recipients and small premiums for recipients who earn more than 100 percent of the federal poverty level. The changes still need federal approval.
Some changes Hutchinson had said he favored, such as the ability to deny coverage to people who do not comply with certain rules, are not in the proposal because federal officials have said they would not be approved.
Hutchinson said in a statement last week, “We’re concerned about the growing numbers and controlling costs and that is one of the reasons that the reforms under Arkansas Works are very important. We hope a new administration will give us the flexibility to have more control over costs and the numbers.”
State Sen. Jim Hendren, R-Sulphur Springs, chairman of the Health Reform Legislative Task Force, said the program’s per-person costs are below the target set by the federal government — a good thing for Arkansas because it would be on the hook for any costs over that level.
Hendren said the size of enrollment will affect the state’s share of the cost, but he said a greater concern to him is the fact that despite receiving an increase in customers, Arkansas insurers have seen their costs go up and have requested a rate increase on all plans sold through the insurance exchange.
The insurers have received approval from state Insurance Commissioner Allen Kerr to increase rates an average of 9.1 percent next year, which is less than the increases they requested. Kerr has said a bigger increase likely will be needed in 2018.
“When insurance carriers are losing tremendous amounts of money on the exchange, we know they’re going to try to make that up in the other parts of their business, which are the employer-sponsored plans, the private plans,” Hendren said.
“I’m concerned that the federal government’s mismanagement of the way that they’re requiring these insurers to provide plans that are completely unaffordable and have no incentives for responsible health care are going to deteriorate the entire insurance market, not just in Arkansas but across the country,” he said.
Ultimately, Hendren said, insurance companies will pull out of exchanges around the country unless the federal government allows states the flexibility to make the plans less costly to insurers.
“I think that’s what makes the program unsustainable” without changes at the federal level, he said.
Sen. Bryan King, R-Green Forest, who has opposed Medicaid expansion from the beginning, said the growth of the program beyond DHS’ prediction is “exactly what we said would happen.”
“Anybody with an IQ over 12 knows that when you start giving out free stuff, they’re going to sign up,” he said. “Next year we could have 400,000 people on this.”
King said Hendren led the push in the Legislature to adopt Arkansas Works and said that at that time neither Hendren nor Hutchinson ever talked about Medicaid expansion being unsustainable.
“Why would I sit there and sell you a program that two months later I would say would be unsustainable?” he said.
Rep. Reginald Murdock, D-Marianna, who serves on the Health Reform Legislative Task Force, said the large number of enrollees shows that there was a high need for the program in Arkansas and that the program is doing what it was intended to do.
Murdock said some of the factors driving up costs, such as the comparatively poor health of enrollees and overuse of emergency rooms, will decline as people become healthier and learn how to use their new insurance plans. With a financial obligation to the state that will peak at 10 percent of total costs, the program is well worth the eventual expense, he said.
“We’ve got more people getting healthy? I’m happy about that,” Murdock said.