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GAO: Arkansas Will Likely Waste a Lot of Taxpayer Money on Medicaid ‘Private Option’

After the Supreme Court made taking part in the Affordable Care Act’s Medicaid expansion optional the White House has really bent over backwards trying to convince red states to sign on. They only succeeded in Arkansas after they agreed to let the state expand Medicaid by putting most new people on private insurance in the so-called ‘private option.’

One of the biggest problems with this plan though is that it costs federal taxpayers way more than using traditional Medicaid would have, according to a new draft report from the Government Accountability Office. Traditionally, public insurance in the United States has almost always been cheaper than private coverage. The HHS really fudged the math and the rules to allow this plan to go forward. As a result taxpayers across the county will likely pay the price. From the GAO:

In approving the demonstration, HHS did not ensure budget neutrality. Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs—significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program—without requesting any data to support the state’s assumptions. We estimated that, by including these costs, the 3-year, nearly $4.0 billion spending limit that HHS approved for the state’s demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services provided to adult beneficiaries under the traditional Medicaid program. In addition, HHS gave Arkansas the flexibility to adjust the spending limit if actual costs under the demonstration proved higher than expected, and HHS officials told us that the Department granted the same flexibility—one which HHS has not provided in the past—to 11 other states implementing demonstrations that affect services for newly eligible beneficiaries. Finally, HHS in effect waived its cost-effectiveness requirement that providing premium assistance to purchase individual coverage on the private market prove comparable to the cost of providing direct coverage under the state’s Medicaid plan—further increasing the risk that the demonstration will not be budget-neutral.

It is worth keeping in mind that Republicans claim they fought against Obamacare because they thought it would be too expensive — then effectively refused to implement a major part of the law until the administration agreed to let them make the program significantly more expensive than it needed to be.

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GAO: Arkansas Will Likely Waste a Lot of Taxpayer Money on Medicaid ‘Private Option’

After the Supreme Court made taking part in the Affordable Care Act’s Medicaid expansion optional the White House has really bent over backwards trying to convince red states to sign on. They only succeeded in Arkansas after they agreed to let the state expand Medicaid by putting most new people on private insurance in the so-called ‘private option.’

One of the biggest problems with this plan though is that it costs federal taxpayers way more than using traditional Medicaid would have, according to a new draft report from the Government Accountability Office. Traditionally, public insurance in the United States has almost always been cheaper than private coverage. The HHS really fudged the math and the rules to allow this plan to go forward. As a result taxpayers across the county will likely pay the price. From the GAO:

In approving the demonstration, HHS did not ensure budget neutrality. Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs—significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program—without requesting any data to support the state’s assumptions. We estimated that, by including these costs, the 3-year, nearly $4.0 billion spending limit that HHS approved for the state’s demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services provided to adult beneficiaries under the traditional Medicaid program. In addition, HHS gave Arkansas the flexibility to adjust the spending limit if actual costs under the demonstration proved higher than expected, and HHS officials told us that the Department granted the same flexibility—one which HHS has not provided in the past—to 11 other states implementing demonstrations that affect services for newly eligible beneficiaries. Finally, HHS in effect waived its cost-effectiveness requirement that providing premium assistance to purchase individual coverage on the private market prove comparable to the cost of providing direct coverage under the state’s Medicaid plan—further increasing the risk that the demonstration will not be budget-neutral.

It is worth keeping in mind that Republicans claim they fought against Obamacare because they thought it would be too expensive — then effectively refused to implement a major part of the law until the administration agreed to let them make the program significantly more expensive than it needed to be.

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Jane Hamsher

Jane Hamsher

Jane is the founder of Firedoglake.com. Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
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