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  • Gov. Mike Beebe

Great roundup yesterday from Roby Brock of where things stand politically with the healthcare “private option” — including the first hints of legislation. Read it!


Copies of draft legislation from the governor circulated at the Capitol on Friday. You can read the draft here. The governor’s spokesperson Matt DeCample stressed that it’s still very much a work in progress and they were not the ones who circulated the rough draft.

The draft articulates the basics of the “private option” framework that we’ve known for some time and that was articulated in DHS’s letter to the feds: the federal money that would have gone to traditional Medicaid expansion will still be routed through the Arkansas Medicaid program but will be used to purchase private health insurance for the expansion pool. Low-income, uninsured folks (below 138 percent of the federal poverty level) will be insured via qualified health plans on the exchange, with the government picking up the full premiums.


The way that this will work logistically, as Roby and I discussed earlier this week: there will be two bills — one that articulates the broad policy and establishes a process for finalizing rules and details going forward, and another that actually appropriates the Medicaid program to spend the federal money.

While it’s just a draft, the outline linked above shows that the framework that the legislature will be voting on will inevitably be somewhat general. Some of the specific rules will be hammered out between now and October when the exchange is set to go live. The legislature needs to decide whether to go forward with the “private option” now, however, in order to get the full three years of 100 percent match rates and also in order to attract carriers to the exchange (deadline for carriers is June and they are waiting to see whether the state opts for the “private option” for expansion). Thus the political question will be how much legislative oversight is built into the legislation that DHS will be charged with carrying out.


The appropriation bill, meanwhile, will require the three-fourths super majority. Both in our interview and his post, Roby asked about a specific dollar amount. This seems unlikely to me. I suppose a ballpark figure could be put in (would probably be a little more than $1 billion per year), but that would only be a guesstimate since no one knows precisely how much will be spent on the “private option” expansion. More to the point, this spending will be entirely picked up by the feds for the first three years, so while the money must be appropriated through the Medicaid program, we’re not actually talking about state expenditures. While the long-term cost is a matter of controversy, everyone understands that the first three years of expansion — whether traditional Medicaid expansion or the new “private option” — are revenue positive for the state.

Two quick things to highlight from the draft legislation:

1) As expected, it features both a “sunset clause” — it covers just the first three years of full federal match rates and would need to be re-approved by the legislature after that, and a “circuit breaker” – the “private option” program is terminated if the feds back out of their committed match rates.

2) Starting to see some hints about the process for determining what carriers will be fully subsidized. The Insurance Department and the Department of Human Services “shall administer and promulgate rules to administer the program,” presumably including the bidding process for carriers (this needs an okay from the feds but shouldn’t be a problem). The draft legislation states that there will be at least two qualified health plans offered in each county in the state. Will there be more than two choices? Well, the bidding process will likely encourage intense carrier competition — for example, perhaps full subsidies will only be available to the two least expensive qualified plans. If so, the amount of choice for consumers that want fully paid premiums may be fairly limited even under this more market-based approach.


We’re getting close to the finish line in terms of having a clear-as-it’s-gonna-get policy for the legislature to debate. I expect we’ll see another draft from the governor’s office some time next week. Meanwhile, key Republicans have their own internal memo articulating some additional wrinkles they’d like to see in the final legislation. More soon!