Private Option Aids the Bottom Line at Arkansas Hospitals

HARRISON, Ark. -- Arkansas' customized approach to Medicaid expansion, known as the "private option," is getting the credit for dramatically reducing the number of Arkansans without health insurance.

A Gallup poll released a few weeks ago shows Arkansas' uninsured rate has dropped from just over 22 percent in 2013 to 12-percent in 2014.

The private option uses federal Medicaid money to buy private health insurance plans for low income adults with incomes up to 133 percent of the federal poverty level, which is $15,280 annually for an individual. In 2020, the Arkansas state government will be responsible for 10 percent of the cost of caring for enrollees.

According to data available June 30 from the Arkansas Department of Human Services, 184,244 Arkansans have had their eligibility for the private option approved through the health exchanges. Of those deemed eligible, 176,691 have enrolled for coverage.

According to the data, 1,914 people have been ruled eligible in Carroll County, 2,646 in Boone County, 1153 in Marion County and 2,481 in Baxter County.

North Arkansas Regional Medical Center President and CEO Vince Leist said it can be tough to keep the lights on at a rural hospital and in its first year, the private option is aiding the hospital's bottom line.

"We've been pinching our pennies for three years," Leist said. "As of this moment, we have not laid off anyone. I'm hoping that we can continue to provide those jobs. We're the second largest employer in our market, and we're a small hospital. Our plan is not to have that happen."

Over the next four years, Leist said his hospital will get $20 million less in reimbursements from Medicare. However, Leist said the new private option patients could offset that by bringing in $9 million over the same period.

In 2013, Leist said 9.1 percent of the patients at NARMC were part of the uninsured portion of the payer mix. Through the first six months of 2014, that's dropped to 3.7 percent.

So far this year, there's been a 44 percent drop in "charity care" or uncompensated care, the care the hospital doesn't see a dime from.

CoxHealth Vice President of Marketing Jim Anderson said in July 2014, 11 percent of patients visiting the hospital were uninsured. Anderson said that affects people with private insurance through their employer, not just the poor.

"Those folks [the uninsured] have those services paid for, and what happens, it's cost shifting," Anderson said. "And of course it's who pays for it? In this case health insurance premiums certainly go up."

Medicaid expansion in Missouri could cover as many as 300,000 low-income adults, but Republican lawmakers have cited the cost after 2020 as a reason for opposing it. Lawmakers have also said the legislature needs to weed out waste and fraud in the program before expanding it.

The Arkansas legislature has to vote each spring on whether to renew the private option. Leist said renewal is going to be crucial for rural hospitals to stay open.

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