A Private Option “compromise” that does nothing.

absolutely_nothing_road_sign_lgThere has been much discussion of the idea of asking the federal government for permission to freeze Private Option enrollment and phase out the Private Option on December 31, 2016.  It is not clear whether this proposal is coming from Private Option supporters or from opponents, but I assume it comes from Private Option supporters since it does nothing.

Even without a new law setting the end of the Private Option on December 31, 2016, that is when authorization ends anyway.  Without doing anything the Private Option ends December 31, 2016, unless Arkansas and the federal government take action to extend it, including the adoption of a new Arkansas law.

  • Federal authorization for the Private option under the CMS Terms and Conditions expires on December 31, 2016.[i]  For the Private Option to continue a new federal waiver is necessary.
  • An even more significant problem is that the Arkansas law authorizing the state to have the Private Option expires on June 30, 2017 and the authorization cannot continue without passing a new law to at least amend the expiration date.[ii]

Sorry, but if someone touts the December 31, 2016 plan as a “compromise”, they are just trying to fool you.

Wouldn’t a moratorium on new enrollments be a victory for Private Option opponents?

If Arkansas was able to freeze enrollments in the Private Option it would at least be a minor victory for Private Option opponents.  But an enrollment freeze is not likely to happen because of serious problems.

  1. There is a serious concern that the federal government would interpret federal law as not allowing eligibility to be frozen.
  2. An even bigger concern is the federal government has absolutely no incentive to allow Arkansas to freeze enrollment.
  3. Waivers can take can take a long time for approval, especially when the federal government has no incentive. (For example, in the 2014 Fiscal Session the Legislature requested some minor waivers to the Private Option demonstration program. The Department of Human Services didn’t submit a waiver request until September.  The federal government didn’t approve the waiver until December 31, 2014.)
  4. With most enrollments or re-enrollments occurring in the fall of 2015 for the 2016 calendar year, if a moratorium didn’t occur before then there would be little or no reduction in the 2016 enrollment.

With the federal government having no incentive to approve a moratorium on enrollment, the federal government may wait as long as possible and then say “No”.  (The scenario might be something like this: After months the feds say “no” and Private Option supporters would then say to Private Option opponents: “You already agreed to allow current enrollees to continue until Decembers 31, 2016, don’t let the current enrollees be thrown off early just because a few more people must be covered.”)

Conduit for Action draft legislation

You may want to point out that the draft legislation prepared by Conduit for Action also includes a moratorium on enrollment.  Actually, the Conduit for Action draft does not include a moratorium on enrollment.  The draft has a different approach that avoids most of the problems of a moratorium. The draft is very different from the idea others are talking about as a “compromise.”

Before beginning an explanation of the draft, one thing needs to be made clear. Conduit for Action supports defunding the Private Option at the end of the fiscal year(June 30, 2015). There is no need for a stand alone bill to repeal the Private Option. The issue can be dealt with in the appropriation bill.  The draft was merely offered as an alternative to defunding, should that be necessary.

Why is the Conduit for Action draft different?

  1. It provides the only possible way to change the scenario from one of Arkansas begging the federal government to please allow us to freeze enrollment, to a scenario in which Arkansas ends the Private Option but offers the federal government the opportunity to continue coverage to existing enrollees for a period of time (December 31, 2015). The only way to have any leverage with the federal government is to do an outright repeal of the Private Option, and adopt a separate provision that allows existing enrollees to continue to the end of the year if the federal government approves their continuation.  This shifts the burden to the federal government.  Coverage for all ends unless the feds decide to allow current enrollees to continue.
  2. The proposal avoids a long period of uncertainty by giving the federal government a short period to act.
  3. The draft provides a real end of the Private Option instead of dragging it out to a time when it would end anyway absent a new Arkansas law and new federal approval.

In short, unlike the “compromise” idea floating around, the Conduit for Action draft actually does something.

[Read Conduit for Action Draft]


[i][i] Terms and Conditions, Centers for Medicaid and Medicare Services NUMBER: 11-W-00287/6.

[ii] Acts 1497 and 1498 of 2013