Should Arkansas Accept the ObamaCare Medicaid Deal?

The Deal: Arkansas would be allowed to send its Medicaid enrollees to the (private insurance) exchange.

Avik Roy summarizes the case for doing that:

There are a lot of reasons why Medicaid provides low-quality coverage with poor access to physicians and enormous amounts of waste, fraud, and abuse. One of the biggest is that Medicaid requires almost nothing of its enrollees in terms of cost-sharing: co-pays, deductibles, and the like. Because Medicaid patients have no financial incentive to avoid wasteful consumption of medical services, they often over-use the emergency room — where the co-pay is usually less than $5 — and other costly facilities.

In addition, “any willing provider” rules prevent the government, or even private insurers managing Medicaid patients, from organizing their provider networks to steer these patients to hospitals and doctors who provide cost-efficient care.

By contrast, insurers on the exchanges can compete on just this basis: by tiering co-pays so as to steer patients to higher-quality, lower-cost doctors and hospitals. By charging higher fees for non-urgent use of the emergency room, and higher co-pays for using branded drugs where cheaper generic ones will work just as well. These are all things that Medicaid, as it’s currently designed, can’t do, even if the Medicaid “benefit” is managed by private insurers, as it already is with two-thirds of Medicaid enrollees.

The Fine Print: For Medicaid enrollees the exchange will be a faux exchange. No additional cost sharing will be allowed. No tiering. Any willing provider rules remain in force.

So, while carriers on the faux-exchanges will be pitted against each other in a thing that some will call “competition,” there will be little room for plans to actually compete with one another.

Comments (13)

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  1. Ken says:

    This is disappointing.

  2. diogenes says:

    Last time I looked, Arkansas ranked 45th in life expectancy. They better do something.

  3. Ryan says:

    I don’t know, I am not health care or economics expert but I believe they ought to do something in light of their poor health care track record.

  4. Amber says:

    I think so. It’s better than any alternatives they may have at this point.

  5. Sadat says:

    If private insurance help eliminate some of the wasteful spending that happens under Medicare, this would be a welcome move.

  6. Patel says:

    I do think it is important that people have health insurance, however, I am against wasteful spending, and if private insurance can cut down on this, I welcome it.

  7. Desai says:

    Why can’t medicare change some of the policies that are leading to wasteful consumption? Surely, if the policy changes help bring down the cost of medicare, it should be done.

  8. Sammy says:

    “Medicaid “benefit” is managed by private insurers, as it already is with two-thirds of Medicaid enrollees.”

    – Low Medicaid payments are contributing to doctor shortage crisis.

  9. Studebaker says:

    I suspect the problem is that the “Medicaid” exchanges will not be the same exchange that individuals use when health plans compete for thier business. Many of the problems with Medicaid will not be solved if this is the case.

  10. Sandeep says:

    I think Medicare is an efficient program when in comes to processing claim, and it might be the best way consumers can combat the hospital monopolies running the health care show. However, I do think that if there are ways to make Medicare more efficient, we should take those steps.

  11. Desai says:

    I thought Arkansas is trying to engineer something different for their health exchange. It will be interesting to see what they come up with.

  12. Gabriel Odom says:

    This is why the Arkansas deal was approved and the Tennessee version was not – the Tennessee version had actual competition.

  13. Linda Gorman says:

    It is a mistake to think that there is anything approaching competition in the federally qualified exchanges. The federal rules leave little rule for leeway and require that plans engage in money-wasting activities.