Townhall: AR’s “Private Option” Is A More Expensive Way to Expand ObamaCare

health-care-costs-660x400Experts have long raised questions about the budget gimmickry involved in the Obama administration’s approval of Arkansas’ Obamacare expansion waiver. The Government Accountability Office even warned that the administration and Arkansas cooked the books to secure the waiver. But now, the state’s own evaluation of the program – spearheaded by one of the program’s architects – shows just how badly Arkansas got it wrong.

Billed as a “conservative” approach to growing the welfare state, Arkansas and the Obama administration colluded to violate federal budget neutrality protocols in order to push Arkansas’ waiver out the door. The “deal” allowed Arkansas to expand Medicaid eligibility to a new class of able-bodied adults under Obamacare but have Medicaid benefits delivered through Obamacare exchange plans instead of the fee-for-service system. (Originally, architects called the program the “Private Option,” although the program has now been rebranded as “Arkansas Works”, due to the political toxicity of the original name.)

The Government Accountability Office warned years ago that Arkansas’ expansion approach would cost taxpayers nearly $1 billion more than a typical Obamacare expansion, just during the first three years. It turns out that the GAO was actually too optimistic – the cost of expansion ended up being even higher.

As part of the waiver deal, Arkansas signed a $3.1 million contract with the Arkansas Center for Health Improvement to evaluate the program. ACHI, which receives a significant amount of taxpayer funding, is also sponsored by Blue Cross Blue Shield, which covers the vast majority of Obamacare expansion enrollees. ACHI’s current director is also Joe Thompson, the former state surgeon general who played a key role in designing the Private Option. To put it plainly, it’s hard to imagine that Arkansas officials could find a group more committed to Obamacare expansion to perform the evaluation if they tried.

Last year, ACHI quietly released their interim evaluation. And the results are huge. According to their analysis, Arkansas’ Private Option is nearly twice as expensive as conventional Medicaid expansion.

According to the state’s own evaluation, regular expansion would’ve cost taxpayers “only” $3,000 per person annually. But during the first year of the Private Option, expansion cost taxpayers more than $5,800 per person. Since that time, costs have only risen and the state expects it will pay more than $6,400 per person this year.

State data also reveals that taxpayers spent an estimated $3.4 billion on Arkansas’ Private Option Obamacare expansion during the last three years. But based on the new information provided in this evaluation report, taxpayers might have “only” spent $1.8 billion under a conventional expansion model. That means taxpayers have spent $1.6 billion more for Arkansas’ “conservative” welfare expansion.

The verdict is in: Arkansas’ Private Option is simply a more expensive way to expand Obamacare.

To make matters even worse, the state is now wrangling with an Obamacare expansion enrollment explosion, with more able-bodied adults in the program than state officials said would ever even be eligible.

This entire nightmare is obviously bad news for taxpayers who are being milked for nearly twice as much as they should have been. But it’s even worse news for the nearly 3,000 Arkansans with developmental disabilities who are still languishing on Medicaid waiting lists for needed services. After all, every extra dollar spent on Arkansas’ failed Obamacare experiment is a dollar that can’t go towards helping the truly needy.

Arkansas’ failed expansion serves as a reminder of the importance of protecting taxpayers through the budget neutrality process – something that the Trump administration should make a priority moving forward. But more importantly, it serves as a warning for state lawmakers across the country and policymakers in Washington, D.C. As the Private Option continues to spiral out of control, it signals to Congress and the new administration how critical it is to begin unwinding Obamacare immediately.

This article originally appeared at on January 25, 2017.


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