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Heritage Action kicks off Obamacare defunding tour by taking aim at GOP
Read more: http://www.politico.com/story/2013/08/heritage-action-obamacare-gop-95711.html#ixzz2cdnoLM9O
ARKANSAS state Republicans vote to accept OBAMACARE!
Pryor told the Arkansas News Bureau:
- See more at: http://talkbusiness.net/2013/06/cook-gop-legislators-hate-admitting-they-passed-obamacare-in-arkansas/#sthash.2KBtNCiD.dpuf
“It really affirms that the vote I cast for it [Obamacare] was the right vote, because they joined me in that. When the chips were down, the Republicans in Arkansas joined me.”
Arkansas: Replacing Medicaid Expansion with Obamacare's Exchanges Could Require 'No Additional Federal Costs At All'
Background on the Arkansas Obamacare deal
On February 26, Gov. Beebe told members of his Republican-controlled legislature that, after a face-to-face meeting with Health and Human Services Secretary Kathleen Sebelius, the Obama administration had agreed to allow Arkansas to expand its subsidized insurance exchanges to the low-income population that the law had otherwise slated to gain coverage under Medicaid.
“Basically [HHS has] agreed to give us about everything that we’ve asked for,” said Beebe. “What that really amounts to is taking the Medicaid population that would be expanded…and use those federal Medicaid dollars and purchase insurance through the exchange. So they would buy private insurance through the exchange for the entire population, and [HHS has] given us permission to do that.”
Given Medicaid’s devastatingly poor outcomes, and the potential for far superior coverage through private insurers, many conservatives—myself included—were encouraged by this development. However, the Congressional Budget Office has estimated that, on average, coverage under the exchanges would cost $9,000 per person per year, compared to $6,000 under Medicaid. Hence, if every state sought the same deal that Arkansas has apparently achieved, Obamacare’s costs could increase by trillions of dollars.
Expanding the exchanges would improve their cost-efficiency
The Arkansas Department of Human Services, however, came to a different estimate than the CBO did. DHS hired Optumas, an actuarial consulting firm, and worked with legal consultants and the Arkansas Insurance Department to come up with an Arkansas-specific estimate of the fiscal cost of expanding the exchanges instead of Medicaid. “These Arkansas estimates,” writes DHS in a memo, “are less than one-third of the Congressional Budget Office cost estimate widely cited in press accounts.”
DHS cites three principal differences between their estimates and CBO’s. First, the CBO only estimated the cost of expanding exchanges to adults between 100 and 138 percent of the federal poverty level, compared to the 0-138 percent expansion envisioned in Arkansas.
Second, expanding the exchanges instead of Medicaid would result in a “market transformation” that would double the risk pool in the exchanges, improving the market power of exchange plans, while increasing competition among the plans to provide a cost-efficient service.
Third, the CBO estimate assumed a wide gap between Medicaid’s payments to doctors and hospitals, relative to those from exchange-based plans. DHS estimates that the actual difference in Arkansas is less than 25 percent, much narrower than the national average.
Expanding exchanges ‘could even produce long-term savings’
DHS’ actuarial review found that the difference between commercial and Medicaid reimbursement rates in Arkansas was currently “less than 25%.” Adding in a 5 percent discount for the fact that exchange reimbursement rates will be lower than traiditional commercial rates, and another 5 percent discount for the fact that the consumer-driven nature of the exchanges would drive prices down another 5 percent, DHS gets to a fiscal premium of 13-14 percent for the exchanges relative to Medicaid.
These are precisely the factors I cited in suggesting that the CBO estimates might be too high. However, it is also true that CBO did take competition-driven cost reductions into account. “In particular,” CBO wrote in 2010, “insurers probably would adopt slightly stronger benefit management procedures to restrain spending or would slightly reduce the rates they pay providers.” CBO has not disclosed the degree to which they believe that such efficiencies would occur, and it isn’t entirely unreasonable for Arkansas to assume greater cost reductions, especially given what for-profit insurers have disclosed about likely provider rates in the exchanges.
DHS points out that Medicaid reimbursement rates would likely have to increase if Arkansas implemented the original Medicaid expansion. “DHS’ estimates…do not yet take into account the likely increase in traditional federal Medicaid provider reimbursement rates that would be required to secure access for a Medicaid expansion population. Incorporating that likely rate inflation will further reduce any net impact of the private option on federal spending,” by further narrowing the gap between what Medicaid and exchange plans would pay.
In addition, federal taxpayers would save $700 million on Medicaid-based tax subsidies to Arkansas, according to DHS. “The state-and-federal impact may drive the incremental costs of the private option to zero, or could even produce long-term savings, depending on the size of the impact created by competition and health-plan management.”
If Arkansas is right, Obamacare will be transformed
There can be little doubt that private insurers in the exchanges would provide far superior coverage to the poor than Medicaid would. The biggest roadblock to expanding the exchanges has been their significantly higher fiscal cost. If the new Arkansas analysis is sound, however, that concern could be alleviated in dozens of states that are currently on the fence, especially those states in which Medicaid reimbursement rates are closer to those of private insurers.
Indeed, there are 23 states with higher Medicaid reimbursement rates (relative to Medicare’s) than Arkansas, when it comes to overall physician services: Georgia, Virginia, Oregon, Louisiana, South Carolina, Washington, Kansas, Vermont, North Carolina, South Dakota, Iowa, Connecticut, Delaware, Oklahoma, Nebraska, North Dakota, Idaho, Montana, Nevada, Arizona, New Mexico, Alaska, and Wyoming. In these states, and also in eight states slightly below Arkansas in reimbursement rates—Alabama, Massachusetts, Mississippi, Maryland, Colorado, Kentucky, Wisconsin, and West Virginia—expanding Medicaid via the exchanges might be a truly realistic and cost-effective option.
It may be, however, that the Arkansas analysis contains flawed or inadequate assumptions. We’ll know more if DHS releases its full analysis. For now, however, the DHS report should give us cause for optimism about the pioneering effort by the Natural State to transcend the broken Medicaid program.
UPDATE: David Ramsey of the Arkansas Times has more details here.
Arkansas Department of Insurance
1200 W. 3rd Street
Little Rock, AR 72201
|Location||Exchange Decision||Federal Approval Status||Structure of Exchange||Type of Exchange|
|Arkansas||Planning for Partnership Exchange||Conditional approval||NA||NA|
Data are as of May 10, 2013.
Coverage through the exchanges will begin in every state on January 1, 2014, with enrollment beginning October 1, 2013. States can elect to build a fully state-based exchange, enter into a state-federal partnership exchange, or default into a federally-facilitated exchange. The Affordable Care Act (ACA) directs the Secretary of Health and Human Services (HHS) to establish and operate a federally-facilitated exchange in any state that is not able or willing to establish a state-based exchange. In a federally-facilitated exchange, HHS will perform all exchange functions. States entering into a state-federal partnership exchange may administer plan management functions, in-person consumer assistance functions, or both, and HHS will perform it.