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The State of Health Care “Reform” in Arkansas

Updated: Apr 13

Today I went down to the luxurious Capitol cafeteria to hear the Cato Institute’s Michael Cannon speak on the current state of Obamacare implementation in Arkansas. What I learned is that we are dangerously close to becoming part of the Obamacare monstrosity — but there is hope that the beast can be stopped, and that should be every Arkansan’s goal.

The answer to stopping Obamacare sounds pretty simple, albeit politically tricky: 1. Don’t expand Medicaid & 2. Don’t create health care exchanges (See our previous reporting on exchanges). First, let’s take a look at Medicaid expansion, beginning with a few statistics from Cannon:

  1. 1 out of 3 doctors do not accept Medicaid

  2. 4 out of 5 dentists do not accept Medicaid

  3. 8 out of 10 people who will be put into Medicaid expansion already have private insurance

  4. $1 out of every $3 in Medicaid dollars does nothing to make patients happier or healthier

No doubt many of you have heard of “The Beebe Plan” for expanding Medicaid that is being championed by even some conservative legislators as a “free-market option.” (Here’s a recent example of the representation Republicans are making.) Cannon rejected this categorization, calling it “cronyism.” In our conversation after the meeting, he told me it’s not a free-market approach until there’s no government money being spent. Touche.

What’s The Beebe Plan? The Beebe Plan would allow the state to use Medicaid expansion money to purchase private insurance for new Medicaid enrollees in lieu of giving them public insurance. Cannon said this plan would cost Arkansans at least $3,000 more per new enrollee. But don’t just take his word for it: those numbers come straight from the Congressional Budget Office, which conservatives and liberals often laud as the ultimate authority on budget projections.

Why does Cannon say “at least” $3,000 more? Because the federal government has already started to wobble on their promise to pay for 90% of the new Medicaid costs: the liberal Center for Budget and Policy Priorities reported on this possible shift in 2011. It has been largely ignored here in Arkansas, but it is very real and very likely according to Cannon. (More on this shifting in an upcoming article.)

Interestingly, this so-called “private expansion” model was explicitly rejected by Congress during their debate over Obamacare. Senate Finance Committee Chair Max Baucus said the proposal would “just blow affordability out the window” and he “couldn’t understand” how anyone could vote for that model. Two Senate committees ultimately rejected the idea. Now, suddenly, the governor and some legislators expect us to believe that the plan will save taxpayers money?

Finally, Cannon said The Beebe Plan would lead to higher premiums for those in the program and will increase the cost of private insurance across the board. Employers will be more likely to ditch their coverage plans and toss their employees into the public system. You can read more from Michael Cannon on The Beebe Plan in his latest paper.

Now, what about those pesky exchanges? Over the last few years, Arkansas has been inching closer and closer to implementing them, but they have not actually pulled the trigger. In December, the legislature voted to accept an additional $18.4 million to go towards “hybrid exchanges,” but the money will not be available for use until July 1, so there is still time for a change of course. If Arkansas refuses to set up an exchange, the federal government will have to set one up themselves. This is problematic for the feds because, well, they have $16,000,000,000,000 in debt and counting. If they cannot come up with the money (or receive congressional authorization to borrow more), they cannot implement the exchanges and the law will collapse.

If Arkansas sets up a state exchange (as opposed to a “federal” exchange), we will have to bear the full cost, according to Cannon. In addition, Cannon said that resisting exchanges will also exempt Arkansas businesses from the Employer Mandate Tax, which requires businesses to pay $2,000 for every employee they do not insure. For these reasons, Cannon says Arkansas should not implement any type of exchange; rather, we should let the federal government deal with it. This path will save the state government, taxpayers, and businesses millions of dollars.

In his closing remarks, Cannon emphasized to the group that Medicaid is not a jobs program. Arkansas hospitals naturally have their hands out, anxious for Medicaid expansion money because they got harmed by Obamacare. But one problem that is prevalent in Arkansas is the effect of Roemer’s law, which says “A bed built is a bed filled:” Arkansas has 23% more hospital beds per capita than the national average. Hospital administrators don’t like empty beds, so they tend to keep patients longer than necessary, run additional tests, etc. This drives up the costs of health care. Cannon suggested the answer for hospitals is to trim government, not embrace more of it. Speaking as if to hospital administrators, Cannon said “Government programs have let you down — why would the solution be more government? Medicaid is not a jobs program, it’s a health care program.”

A final word to legislators who are considering embracing Medicaid expansion: Cannon said doing so would “absolutely” be an establishment of Obamacare in Arkansas.

I’ll have more on The Beebe Plan and the shifting of Medicaid reimbursements in the coming days. In the meantime, here’s an open invitation to conservative legislators who are supporters of the “private option”: we would like to know what you’re talking about. We’ve heard plenty of extraordinarily optimistic descriptions of the plan you’re developing, but we’ve seen very little in the way of concrete details. If you’d like some space on our website to describe what you’re working on, we’d be delighted to give you equal time.

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