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Private alternative to Medicaid expansion faces crucial vote in Arkansas

February 17, 2014 at 6:24 PM EST
In Arkansas, an alternative to the Affordable Care Act’s Medicaid expansion uses federal dollars to purchase private health plans for low-income residents who fall in a coverage gap. But now, as other states consider following suit, the Arkansas law, known as the “private option,” could end unless it is renewed by state lawmakers. Hari Sreenivasan reports.
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JUDY WOODRUFF: Ever since the Supreme Court ruled that states do not have to expand Medicaid as part of the Affordable Care Act, there have been big battles over that issue.

One bipartisan alternative has emerged in Arkansas that appeals to some other red states as well, most recently Virginia. It allows Medicaid dollars to be used to buy private insurance for low-income residents.

But now the Arkansas program is facing a crucial vote in the state Senate this week and its fate may be jeopardized.

Hari Sreenivasan has our story.

MAN: We didn’t make a big yield this year, but it’s not bad.

MARY FRANCES PERKINS, Private Option Patient: OK.

HARI SREENIVASAN: It’s been a while since Mary Frances Perkins last visited the green bins on the family farm.

MAN: This is…

MARY FRANCES PERKINS: What’s it made out of, brass?

MAN: This is brass.

MARY FRANCES PERKINS: OK.

HARI SREENIVASAN: She used to help out with almost everything on this strip in land in Carlisle, Arkansas, but after a recent diagnosis of Parkinson’s, even basic cures became too much.

MARY FRANCES PERKINS: Can you hold my hand?

MAN: Just get ahold of him.

HARI SREENIVASAN: Like many family farmers, Perkins didn’t have access to employer-based health insurance. And a preexisting condition meant she was denied repeatedly when she tried to buy her own plan.

MARY FRANCES PERKINS: So, I was out here with no health insurance whatsoever. I spent days and weeks in the bed, couldn’t walk. Went to different doctors throughout Little Rock, had to pay cash for everything, slowly paid off the debt, a little each month until it was paid off. Had different tests that cost $5,000, $6,000. Paid it all off, but kind of held back from what I really needed to do because, number one, they couldn’t figure out what was wrong, and, number two, it cost so much money. And had an MRI.

HARI SREENIVASAN: At first, the Affordable Care Act didn’t help much either. That’s because Perkins fell into a coverage gap that’s opened up in states refusing to expand traditional Medicaid.

She didn’t make enough to qualify for a subsidized plan, and too much to enroll in the existing Medicaid program. But then came an unexpected twist from the state capital: A new program would allow Arkansas to use federal Medicaid dollars to purchase private health plans for low-income residents.

Perkins was among the first to sign up, and her new insurance kicked in at the start of the year.

MARY FRANCES PERKINS: The first thing I did was go to my general practitioner, and I walked in the room and she looked at me and she said, OK, we have insurance now. Where do you want to start?

Even my doctor knew how much care I needed, and she was happy for me that I had insurance.

HARI SREENIVASAN: It’s known as the private option, and it’s designed to pay the premiums of nearly 250,000 uninsured Americans who make less than 138 percent of the federal poverty level and didn’t already qualify for Medicaid.

MAN: The question before the House, the passage of House Bill 1219.

HARI SREENIVASAN: The idea became law last spring with overwhelming bipartisan support in the House and Senate.

MAN: Cast the ballots, 70 yeas, 23 nays. House comes to order.

HARI SREENIVASAN: Followed by a waiver from the federal government to use Medicaid expansion funds to pay for it.

Immediately after passage, it was championed as a health reform approach that both parties could tolerate. Conservatives liked the idea that private option patients would access their health care through insurance plans like Blue Cross and Blue Shield, as opposed to the traditional government-run Medicaid program, which many Republicans feel is inefficient and offers first poor-quality care.

Supporters say it achieves the same results as traditional Medicaid expansion by saving hospitals and taxpayers millions in uncompensated care costs and bringing billions of federal dollars into the state economy. The federal government will pick up 100 percent of the cost in the first three years, with states eventually paying 10 percent thereafter.

About 100,000 people have enrolled so far. At the nonprofit Arkansas Advocates for Children and Families, Anna Strong and her team say the expansion has gone well in the state, which has some of the lowest percentages of insured residents in the country and some of the worst health outcomes.

ANNA STRONG, Arkansas Advocates for Children and Families: I consider our state a big leader in trying to say, you know what?  You’re going to do what’s right for our state. We’re going to maybe do it a little bit differently than folks would have expected, but this is good move for Arkansas.

HARI SREENIVASAN: While the state is alone among its conservative neighbors in expanding a version of Medicaid, the idea is catching on elsewhere. Iowa has passed its own form of the private option, and lawmakers in New Hampshire, Pennsylvania and Utah are looking into it as well.

Part of the appeal comes from the fact that so many young people, including students like 28-year-old Tyler Pearson, are signing up. Since they’re enrolling in private plans, rather than a separate Medicaid program, the influx of young, healthy people expands the general risk pool, and keeps costs down for everyone else.

The way Pearson sees it, the fact that more than half of new private option patients are under 40 helps prove that young people do care about insurance.

TYLER PEARSON, Private Option Patient: I consider myself a very healthy individual. I’m in good shape. I exercise frequently. I eat right. I take care of myself. But I have still had things that I have had to go to a doctor for. I still need to have my teeth cleaned. I still need to have checkups. I could still break my arm at any moment, you know, and I know that.

HARI SREENIVASAN: But while Pearson received his new insurance card at the beginning of February, he knows he may lose it again soon if the legislature doesn’t renew funding for the upcoming fiscal year. The prospect of that happening is looking increasingly cloudy.

Under state law, appropriations must be reapproved every year by a three-fourths majority. But the two votes in the Senate that put the private option over the top last year are now in jeopardy. One was lost after a supporter of the private option resigned recently and was succeeded by John Cooper, who won a special election last year on a platform opposing the Affordable Care Act. Around the same time, state Senator Missy Irvin decided to change her yes vote to a no in part due to the disastrous rollout of the federal law.

So, if no one changes their currents position, the private option in Arkansas will be dead. Governor Mike Beebe says that would be a shame, given the overwhelming support.

GOV. MIKE BEEBE, D-Ark.: We don’t have a problem with the majority of the legislature being for this. We don’t have a problem with a supermajority of the legislature being for this. We don’t have a problem with the majority of Republicans and Democrats being for this. They are. But it takes 75 out of 100 House members and 27 out of 35 senators. So one senator or one House member could sway the entire — the entire effort.

HARI SREENIVASAN: But in the prosperous Northwest corner of the state, home to world headquarters for companies like Wal-Mart and Tyson Foods, Republican state Senator Bart Hester says the federal government simply can’t afford it. Hester believes states like Arkansas will either end up paying more than expected or sit by and watch the federal government pile up debt.

The real answer to widespread coverage, he says, is jobs and business-friendly policies, not a government giveaway. As proof, he points to companies like toy manufacturer Redman and Associates, which is in the process of bringing jobs back to his district from China.

BART HESTER, State Senator: For the country that’s already $17 trillion in debt, each child that is born in America already has $50,000 debt associated with their Social Security number. Alright? And so I think we as a society have to be conscious of that and have to understand that at some point those debts are going to come due.

HARI SREENIVASAN: With federal dollars coming in and the private option expected to save the state money, Arkansas passed $85 million in tax cuts last year. If the plan loses funding, the state will be millions in the hole, and that could mean big cuts for other programs. But many say the personal impacts will be deepest of all.

MARY FRANCES PERKINS: Do you guys want a cookie?

HARI SREENIVASAN: Mary Frances Perkins says she’s just starting to get the proper treatment for her Parkinson’s and cannot imagine losing ground.

MARY FRANCES PERKINS: It would just be a nightmare. It would just be a — I would feel like my government had absolutely turned their back on me.

HARI SREENIVASAN: Without money for the private option, the insurance and everything that comes with it will end June 30.