Sen. Jim Hendren, one of the co-chairs of the Health Reform Legislative Task Force, is feeling nostalgic for the good old days before the private option in Arkansas, back when one in four adults between the ages of 19 and 64 had no health insurance. Hendren is probably something of a bellwether: the governor’s nephew, Hendren was a hardcore opponent of the private option who led the way for the Gov. Asa Hutchinson‘s plan to continue the policy for two years and create a task force to figure out what to do next. John Brummett interviewed him for a Talk Business show this Sunday and gave a preview of Hendren’s comments in a D-G column this morning. Per Brummett, Hendren suggested “that returning to a system of providing uninsured care through hospitals is a possibility.”
This is a fancy way of saying that Hendren is still dreaming of ending the private option and cancelling the health insurance of more than 200,000 Arkansans. The “system” that Hendren refers to: widespread uninsurance, leaving the state’s poorest citizens at risk for financial disaster and with drastically reduced access to care; the hospitals and the state on the hook for tens of millions more in uncompensated care; making preventative and primary care and necessary medication prohibitively expensive for the state’s neediest residents, who would seek more expensive health care only when things get worse and people get desperate and head to the ER.
It’s hard to parse Hendren’s comments without the full context, but this sounds typical of the the hand-waving and half-baked analysis I’ve heard for the last two years from legislators who want to have it both ways — they want to end coverage for hundreds of thousands of Arkansans without owning the consequences of doing so.
From Brummet’s column:
He said he was trying to determine whether we might be buying insurance for poor people who don’t use it for actual care, in which case it might be better simply to pay for the rare care directly or absorb the costs some other way.
There is a system for paying for care directly: old-fashioned, fee-for-service Medicaid! What Hendren is describing is the outline of a single-payer system. I am consistently shocked by how often I hear versions of this from legislators who oppose the private option. They often tell me they want to cut out the middle man of the insurance companies and have the government directly pay for care. The Tea Party wing in the legislature opposed to the private option sometimes sounds like Paul Krugman when you ask them what they’d do instead.
I assume that Hendren knows this, but just in case: it’s already the case that under Obamacare rules, insurance companies participating in the private option must spend 80 percent of what they charge for premiums on actual care. If the premiums are higher than 80 percent of the real cost of care, the companies must reimburse the customer (in this case, the government). There is a similar reconciliation for the cost-sharing that the government subsidizes in private option plans. You can read all about it here, but the short version is that the cost of insuring folks via the private option is already based on the overall true cost of care for the beneficiaries, not on the premium price for insurance plans that might or might not be used. Of course we are in some cases buying insurance for people who don’t end up needing it (it’s insurance!), but high utilizers and low utlitizers come out in the wash: the real cost is simply the real cost of care for all beneficiaries. Now perhaps Hendren wants to get rid of that other 20 percent we’re potentially paying for, which the companies can use for marketing, admin, and profit. In which case, we could turn to…traditional Medicaid! Fine by me.
Hendren is probably not on board for traditional Medicaid. So…what? As we are seeing in Florida, Georgia, and elsewhere, the feds have no interest in helping states which refuse Medicaid with uncompensated care costs that explode because of that decision. Without federal help and the generous match rates of Medicaid expansion, the state would quickly find that maintaining access to health care for the state’s poorest residents (not to mention keeping hospitals afloat) would quickly become prohibitively expensive. Arkansas would end up spending more state money to offer less care to less people.
Instead, the “solution” that Hendren is hinting at is the same one he was pushing in 2014: end the private option, offer nothing in its place, and leave the state’s poor to fend for themselves. He seems to be under the impression that things were just fine before, when desperate uninsured people could show up at hospitals legally required to at least provide emergency care and stabilize patients. Well, let’s take a look back. Here’s a Kaiser Family Foundation report on the uninsured before the enactment of Obamacare:
Delaying or forgoing needed care can lead to health problems, making the uninsured more likely to be hospitalized for avoidable conditions. The uninsured are less likely than those with insurance to receive preventive care and services for major health conditions and chronic diseases—and as a result, many suffer serious consequences.
The cost of health care has grown in the past decade, but represents a particular challenge for those without insurance. Medical bills can put great strain on the uninsured and threaten their physical and financial well-being. Almost half of uninsured individuals reported having trouble paying medical bills, compared to less than one in four individuals with coverage. In addition, the uninsured are three times more likely than the insured to be unable to pay for basic necessities because of their medical bills.
Per Brummett (paraphrasing), Hendren said that “an artificial market is never as true or as reliable in the long term or ultimately as desirable as a real one.” Brummett points out that farmers and highway contractors might be interested to know that federal money makes their markets “artificial.” More to the point, the government already subsidizes almost all health coverage in this country — not just Medicaid, Medicare, and veterans programs, but employee-sponsored insurance too (via the tax exclusion). Not to mention taxpayers dealing with less cost-efficient uncompensated care on the back end, a regime that Hendren seems to want to return to. Not to mention the very generous plans offered to Arkansas legislators.
If Hendren really wanted a “true” market in health care, he could try foregoing his own health insurance and fending for himself. He would find that, for better or worse, navigating the U.S. health care system without health insurance is a nightmare. Those who’ve tried often face limited access to care, crippling bills, and terrifying choices between needed care/medication and basic necessities. Of course, Arkansas legislators aren’t going to give up their own health insurance. The question is whether they are going to take it away from their poorest constituents.