1. The Arkansas Health Care Independence Program An Alternative to Medicaid Expansion Richard Armstrong Director Department of Health and Welfare December 9, 2013

2. Arkansas Health Care Independence Program The “Private Option” Uses a free market approach instead of expanding the traditional Medicaid program. Purchases qualified health plans from the insurance exchange for low-income adults who are not eligible for Medicaid. Uses federal dollars to pay for premiums. Approved by CMS as a demonstration project, meaning it is a pilot project that cannot cost more than traditional Medicaid coverage. 2

3. Arkansas Demographic Profile Arkansas has a population of 2.9 million people; $40,150 median household income, 26% of adults under 65 are uninsured. Arkansas projects 225,000 adults <138% of poverty will be eligible for the Private Option. Idaho comparison: 1.6 million people, median household income of $46,900, adult uninsured=25% Idaho projects 104,000 uninsured adults <138% of poverty. 3

4. Arkansas Private Option Eligibility For people with incomes below 138% of poverty; $15,860 for single adult and $32,500 for family of 4. Applicants are directed to apply through the Access Arkansas state portal, the state’s social service benefit eligibility system. Arkansas does not have a state-based exchange. If a person applies through the federally facilitated marketplace, they are sent a letter informing them to apply through the state eligibility portal. Eligible participants shop in the portal to select and enroll in a high quality, affordable health plan that meets their specific needs at a competitive price. 4

5. Private Option Plans State pays insurer directly for premium costs. Premium payments are 100% federally funded until 2017, at which time state begins paying a 5% share. State share of premium costs increases in subsequent years, capping at 10% in 2020. Plans are silver metal level; there must be an option of two plans for participants to choose from. 5

6. Arkansas Private Option Plan Medicaid required benefits that are not offered in eligible QHP plans are supplemented through existing Medicaid program framework. Includes non-emergency transportation and EPSDT for adults under 21. Idaho’s state-based exchange could require supplemental benefits—further study would be necessary. 6

7. Arkansas’ Private Option Experience Data from Oct. 1 – Nov. 27: 80,413 applications filed. 68,692 determined eligible; many of the remaining are still in the eligibility determination process. 58,591 have completed enrollment. 7

8. Advantages of Arkansas Model Doubles the size of the Arkansas marketplace enrollees, better leveraging economies of scale:  Encourages private carrier entry,  Expands service areas and access,  Results in more competitive pricing. 8 Increases access to medical providers who normally did not accept, or limited the number of Medicaid participants they served.  Arkansas estimates traditional Medicaid expansion would have increased its Medicaid fee-for-service network by 40%, creating access problems.

9. Advantages of Arkansas Model Reduces cost shifting due to uncompensated, indigent care. Increases payments to providers for existing uninsured patients they currently treat. Reduces churn between Medicaid coverage and health plans on the exchange. Requires health plans to participate in its payment improvement initiative, expanding the number of providers participating in the state’s payment and delivery system reform. In the first two months, very high acceptance by public. 9

10. Arkansas Demonstration Hypothesis 1.Improve patient access to medical providers. 2.Reduce churn from Medicaid to marketplace policies. 3.Improve quality of care by requiring insurers to participate in payment improvement initiative. 4.Reduce costs for everyone in the marketplace exchange by doubling enrollees. 5.Improve the quality of health plans offered in the marketplace. 6.Reduce expenses for uncompensated care and cost shifting. 10

11. Questions?