LITTLE ROCK — A state legislative panel heard a presentation Tuesday on how state officials propose to implement the Legislature’s directive that the so-called private option include incentives for participants to take personal responsibility for managing their health care.
Testifying before the Health Insurance Marketplace Legislative Oversight Committee, state Surgeon General Joe Thompson and others outlined proposals for incorporating increased cost sharing and “independence accounts” into the private option, Arkansas’ version of Medicaid expansion.
The 2013 law that created the private option requires that it include those elements and calls for the program to end if the federal government does not allow them. Thompson said he was confident the proposals would receive federal approval.
The private option uses federal Medicaid money to subsidize private health insurance for Arkansans earning up to 138 percent of the federal poverty level. Cost sharing is already part of the program for people earning between 100 and 138 percent of the poverty level, but the state will seek approval to expand cost sharing to include people earning 50 percent of the poverty level or more.
The plan calls for the creation of accounts, called independence accounts, for private-option participants earning at least 50 percent of the poverty level. The accounts would be similar to health savings accounts and would be administered by a third party to be chosen through a competitive bidding process.
Each account holder would be expected to make monthly contributions to the account, based on the person’s income. Contributions are expected to range between $10 and $25 per month for people earning between 100 percent and 138 percent of the poverty level and are expected to be $5 per month for people earning between 50 and 99 percent of the poverty level.
“You kind of have a sliding scale of exposure to cost sharing as your income increases,” Robin Arnold-Williams of Leavitt Partners, a Utah-based consulting firm contracted by the state, told the panel.
A card would be issued to each account holder that could be used to pay co-payments and deductibles, up to the out-of-pocket limit for the person’s plan, at the point of service.
People who earn 100 percent to 138 percent of the federal poverty level and fail to contribute would have their cards inactivated and would be held responsible for co-payments and deductibles at the point of service. Lower-income people who fail to contribute could still use their card to pay co-payments and deductibles and would not be denied service, but they would be billed for those payments, which likely would exceed $5 per month.
The system would include not only punishments but also rewards: People would accrue $15 per month in rollover funds each time they make a timely contribution to their account, and if they leave the private option and move into the regular private insurance market they would be able to roll over up to $200 to their new plan.
Arnold-Williams said the accounts should result in “additional personal responsibility — consumers, enrollees, who are better informed, who are more engaged and who can therefore engage in better utilization of the health care system and will actually improve their health outcomes, as well as meet the state’s objectives around sustainability of the program.”
Rep. Kim Hammer, R-Benton, expressed concern about the impact on providers if patients fail to make monthly contributions to their accounts.
Thompson said the proposed system will create incentives not only for patients to take personal responsibility but also for providers “to engage with their patient and teach them how to best utilize the health care system. They’ve never had that incentive before. They’ve had an incentive to see them more times.”
Rep. Joe Farrer, R-Austin, said he was concerned that people who fail to contribute to their accounts would be denied treatment everywhere except in emergency rooms.
“Are we going to flood these emergency rooms?” he asked.
Thompson said he did not expect that to be a problem. He said people earning between 50 and 99 percent of the poverty level will still be able to use the cards even if they fail to contribute and noted that the state has already seen a 2 percent reduction in ER visits since private-option coverage began in January, as well as a 24 percent reduction in ER visits by uninsured people.
The proposed additions to the private option are due to be released for public comment no later than Aug. 1, and they must be submitted to the federal government by Sept. 15. Approval must be granted in time for them to be in effect by Feb. 1 if the private option is to continue.