So I just skimmed through the Arkansas Section 1115 Medicaid waiver application,which was submitted to the federal government a few days ago. This proposal is unique and uses Medicaid funding to buy coverage in the new marketplace through a premium assistance arrangement.

I AM happy that Arkansas legislators and the Governor were sensible enough to accept the offer of generous federal funding and 250,000 Arkansans will get health coverage. This is a win for Arkansas kids too, whom will benefit by having their parents covered.  (As we have blogged about many times, kids are better off when their parents have health coverage, as they are more likely to have their health care needs met and their families are able to achieve greater financial security .)

But I am holding my nose at the logic of it all – which doesn’t really pass the sniff test once you get beneath the surface.  One of the main arguments the state notes in its application about going in this direction, is to assure access to providers. Indeed the state argues that Medicaid would not have had the provider capacity to meet the increased demand associated with this eligibility expansion otherwise because Medicaid doesn’t reimburse providers adequately. And, they argue, the private market will be a more efficient way to cover people.

Hmmm. So if the private route is going to work better because people will have better access, isn’t that because, apparently, the providers will be paid better in the exchange??? If the political will had existed, couldn’t the state have raised provider reimbursement rate for Medicaid providers if there really is an access problem? And ultimately, isn’t this why Medicaid is actually more efficient than the private sector—because reimbursement is lower?

That may not be a good thing – but you can’t have it both ways…. I fail to see how routing people through the private market is going to save money…

Another reason I will be holding my nose for a while longer is that one of the main selling points of the proponents of the Arkansas model is that it will cut down on churning – i.e. folks moving between Medicaid and premium tax credits because of income changes.

This is a good objective, and the state’s initial application included a proposal to provide 12 month continuous eligibility to the newly eligible adults. This would have assured that these adults would remain eligible for their coverage throughout the year if they had a small change in income. But this proposal has now been dropped – so, while a parent might be able to stay with his or her same plan, the family will have to go through the process of applying for the premium tax credit for those few months of the year when their income changes. I thought the 12 month continuous eligibility feature of Arkansas earlier version was a thoughtful innovation that made sense and supported the rationale of going this route.

We will develop more formal comments once the application is up for 30 days of public comment on the federal side.