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GAO’s “Cost Concerns” on PO, Part II

Updated: Apr 13

We wrote last month about a recent Government Accountability Office (GAO) report: it raised some red flags about the costs to taxpayers created by Obamacare’s Medicaid expansion in Arkansas. Our pals at the Foundation for Government Accountability (FGA) also broke down the damning report last week at Forbes. From FGA:

HHS actuaries were right to question Arkansas’ assumptions, even if the Obama administration ultimately ignored their concerns. Would Arkansas really have increased reimbursement rates by up to 67 percent if it had simply expanded its fee-for-service Medicaid program? There are at least two compelling reasons to think the answer is “no.” First, Gov. Mike Beebe (D) had been lobbying for ObamaCare’s Medicaid expansion long before the Private Option concept was developed. Surely if the state planned to increase reimbursement rates, that plan would be reflected in the cost estimates produced while the Beebe Administration was lobbying for regular ObamaCare expansion, right? Wrong. Former Medicaid director Andy Allison produced a number of estimates of the Medicaid expansion’s costs – well before the Private Option was ever conceived – but Allison never included any kind of reimbursement rate increase in those projections. Even a casual observer might expect a projection that the Washington Post called “one of the most detailed [plans] by a state so far” to include the cost of increasing provider reimbursement rates, if that was in fact part of the plan. But provider reimbursement increases were not included. In fact, the Beebe administration didn’t include it in any of its cost estimates and it certainly did not advertise this fact while lobbying state legislators to expand the traditional fee-for-service Medicaid system. It wasn’t until the state needed a justification for a more expensive ObamaCare expansion that these “hypothetical costs” were invented. Second, believe it or not, the state of Arkansas was actually planning to cut reimbursement rates, not raise them. During the same legislative session that Arkansas lawmakers passed the Private Option ObamaCare expansion, the Beebe administration proposed freezing reimbursement rates for hospitals and other facilities, while cutting reimbursement rates for other providers in order to fill a $460 million Medicaid shortfall. Not only were Arkansas officials not planning to do what they promised the federal government they would have done absent the Private Option, they were actually preparing to do the exact opposite.

You can read the rest of the report here.

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