CALL FOR ACTION
“NO TO THE PO”
TERMINATION OF THE ARKANSAS “PRIVATE OPTION”
Jan 6, 2014
As leaders responsible to the people of Arkansas, we will work to terminate the Arkansas Health Care Independence Act of 2013 (Private Option) over the next two months for the following reasons:
- Our primary concern is for the complete health and well-being of the people of Arkansas. We will work to insure that the excellent health care (as opposed to health insurance) enjoyed in this great country is continued and available to all Arkansans at affordable costs.
- It is our job to protect the health care and financial condition of our total population, including:
- Our concern for Arkansans’ as a result of the passage and implementation of the Private Option are summed up in one statement:
The intent, purposes, and ability to terminate the Arkansas Health Care Independence Act of 2013 have been thwarted by the contract forced on Arkansas by the federal government which unilaterally expanded entitlement benefits to the participants.
Our specific concerns are as follows:
- Obamacare is bad for Arkansas and the Private Option is the expansion of Obamacare:
- For an overwhelming number of reasons Obamacare is clearly harmful to health care for all Arkansans;
- Arkansans overwhelmingly oppose Obamacare;
- As a result of the contract with the federal government, the Private Option is now proven to be an expansion of Medicaid and Obamacare in Arkansas-thus causing Arkansans to be forced into aiding in the implementation of Obamacare in our entire state and country– contrary to the 2012 US Supreme Court ruling.
- The Private Option was quickly passed in April 2013 due to what we now know was a false sense of urgency, based on now false principles and false assumptions , not the least of which was that the Arkansas Legislature could pull the trigger on the PO at its discretion .
- c. Now that we have passed it….and now “read it”, we discover that Arkansas has entered into a contract with the federal government vastly different than the Arkansas legislature intended.
Those differences thwart the intent, purposes, and ability to terminate the Act while giving participants entitlement benefits.
- d. These differences are set out below.
i. The intent and purposes of the Health Care Independence Act of 2013 have been thwarted in that:
- Rather than competitive and value based purchasing of insurance with increased participation, intensifying price pressures, and reduce costs for both publicly and privately funded health care, we have limited state-wide providers at increased premiums expected to be 138.6% more than prior to the passage of the Act (5th highest increase in the nation); and we have more than 18 new federal taxes to pay as a result of Obamacare.
- Rather than promoting personal responsibility and efficiencies through cost sharing as well as discourage over-utilization and reduce waste, fraud, and abuse, we see that programs such as the PO have proven to drive use of the emergency room up 40% for non-emergencies by the users with no improved health consequences;  (and since there is no costs to these users thus no cost sharing involved.)
- Rather than private health care options increasing and government-operated programs such as Medicaid decreasing-and actually reducing the size of the state-administered Medicaid program, we see the PO has expanded Medicaid;
- Rather than the decisions about the design, operation and implementation of the PO, including cost, remaining within the purview of the State of Arkansas and not with Washington, DC, we find that the contract forced on Arkansas by the federal government gives the federal government all the say on design, operation, implementation and the cost—including how much or that all the costs are borne by Arkansas taxpayers.
- 5. Rather than improving access to quality health care and increasing quality and delivery system efficiencies, we find from the assurances of our own Arkansas medical community and unbiased national research that health care will be limited and likely rationed compared to that which Arkansans have grown accustomed. “Like having a life-time of gasoline for your bicycle,” was a recent statement made by a local family practice doctor when asked what he thought of Obamacare and Arkansas’ implementation of its Private Option.  (Sadly we have just witnessed a hospital in CA fighting in court to take from the family the decision to end the life of a young patient—in the name of quality affordable care-referencing her as a deceased body.)
ii. The triggers within the Act to terminate the program at the discretion of the Arkansas legislature are effectively removed or without real consequence. The five (5) triggers within the Act are the following:
- 1 of 5: DHS is only allowed to submit to the federal government Medicaid State Plan amendments which are optional and therefore may be revoked by the state at its discretion;
- 2 of 5: If DHS is unable to confirm AR employers shall not be subject to penalties…the program shall not be implemented;
- 3 of 5: The Program shall terminate within 120 days after a reduction in any federal medical assistance percentages –meaning if the program costs AR in excess of 0% to 10% between 2014 and 2020 it is terminated;
- 4 of 5: An eligible individual enrolled in the program shall affirmatively acknowledge that the program is not a perpetual federal or state right or a guaranteed entitlement and subject to cancellation upon appropriate notice;
- 5 of 5: This Act requires appropriations for its continuation; if such is not made by the Arkansas legislature, the Act is void.
Although the Act itself contains the above triggers, through its Terms and Conditions contract the federal government (CMS) has forced provisions into the PO which prevent discretionary termination. The contract with CMS purports to severely limit Arkansas’ ability to terminate the program by:
- Giving the federal government (CMS) authority to approve or disapprove a transition and phase-out plan.
- Providing the state cannot even begin phase-out procedures until receiving CMS approval.
- Imposing a lengthy minimum notice period of seven months. This leaves one wondering whether, if the seven month period were to go into or near a new calendar year, would CMS impose another 12 months of coverage beyond the notice period (mirroring “eternal life of a government program” syndrome.)
iii. It was stated in the Arkansas legislation that the private option is not an entitlement program but the CMS Terms and Conditions give rights to participants. CMS added as a condition for terminating the program, that participants in the Private Option then be given an opportunity for a hearing on whether he or she is eligible to be covered by Medicaid and added a requirement that during the person’s appeal process the participant must still be given coverage under the private option, which could be even after the Private Option was scheduled to terminate.
iv. CMS added a condition that has the potential of causing the state to pay more than allowed in Arkansas’ Health Care Independence Act of 2013. CMS added a budget neutrality requirement which could shift cost overruns to Arkansas. Budget neutrality is not an unusual provision, however, it must be noted that the provision has the potential of increasing Arkansas’ burden beyond the spending limits set in Arkansas’ Health Care Independence Act of 2013, at the discretion of the federal government.
v. CAN WE TRUST THE FEDERAL GOVERNMENT NOT TO CHANGE THE RULE ON US? The track record of the Affordable Care Act is so bad that it is difficult to keep up with all the changes, exemptions and delays. Medicaid expansion is part of that legislation. For Arkansas Medicaid expansion wavier, allowing Arkansas to offer the “Private” Option, CMS Terms and Conditions have already changed the ground rules Arkansas set by its legislation.
vi. SHORT-TERM FEDERAL FUNDING ADVANTAGE VERSUS LONG TERM STATE OBLIGATION. The federal government promises 100% funding initially but after the state has gotten used to having the program the funding goes down to 90% and who knows what the federal funding will be in a few years when the program is fully entrenched in Arkansas.
vii. IS FEDERAL FUNDING LEVEL SUSTINABLE? Remember the funding is being promised by a federal government that is over $17 trillion in debt and rising.
viii. FREE MONEY IS NOT FREE. It was too tempting not to take “free” federal money that Arkansas would lose out on if Arkansas didn’t expand Medicaid or do so through the Private Options. But the money is not free. By Arkansas adding this PO, we have increased the burdens on all across the US. And the money comes from our taxes. Be aware that several new taxes have been added (at least 18). Also, be aware that the “free money” adds to our national debt that ruins our economy and that will continue to burden our children and grandchildren.
ix. WHY HAVE SO MANY STATES REFUSED THE MONEY? If the “free” money was such a good thing then why have only half of the states accepted the money? Many states have refused to expand Medicaid coverage. The Private Option is just another way of expanding the coverage. Note that in Arkansas’ waiver application the state admits that expansion of Medicaid is not workable in Arkansas.
- ARKANSAS CAN AND WILL TAKE CARE OF ITS OWN! We are committed first to the health and well-being of Arkansans. As a result, we will work to immediately end the PO and replace it with real Health Care reform which is good for all Arkansas. We can do this! We do not need an overreach by the federal government or enslavement to federal debt to take care of the health and welfare of those in our state.
This “Call for Action” is endorsed by the following AR State Senators and AR House Members:
Senators: House Members:
 Page 2 of CMS Terms & Conditions; see http://www.conduitforaction.org/arkspecialtermsandconditions/
 (CFC)-ISSUES WITH THE CMS TERMS AND CONDITIONS:
To implement Arkansas’ Private Option the state filed an application for 1115 Waiver from Medicaid requirements. The application was approved but as a condition for approval, CMS attached terms and condition as a condition for approval. The requirements are identified as Centers for Medicare and Medicaid Special Terms and Conditions, Document Number 11-W-00287/6.
Notice. Arkansas’ Health Care Independence Act of 2013 says Arkansas may terminate the private option “upon appropriate notice”. (ACA 20-77-2405 (i)(2)) Although “appropriate notice” is not defined in the act, it should be noted that the act provides that if federal medical assistance percentages fall below a threshold, the program automatically terminates within one hundred twenty (120) days. (ACA 20-77-2405 (h)) The CMS Terms and Conditions purports to make the termination process more difficult and even imposes an approval procedure. The CMS Terms and Conditions: (Note: the ACA subchapter listed in the Arkansas Act l changed once codified.)
- Requires a minimum of seven (7) months of termination notice but this period could be longer in trying to meet all CMS requirements. This includes six (6) month written notice to CMS and before that notice a thirty (30) day public comment period before submitting written notice to CMS (Terms and Conditions (9)(a));
- Requires Arkansas to obtain CMS approval of a transition and phase-out plan. No standards are specified on the criteria to be used by CMS in determining whether or not to approve the state phase-out plan. No time limit is provided for CMS to take actions. This appears to be a de facto veto power. (Terms and Conditions (9)(b))
- Prohibits Arkansas from even beginning implementation of phase-out activities until 14 days after CMS has approved the plan; (Terms and Conditions (9)(b))
- Extends the time in which the private option must be operated by guaranteeing participants the right to continue coverage under the private option even after termination of the program, if the person is appealing a Medicaid denial. (Terms and Conditions (9)(d)) The participants in the private option have the right to a hearing to determine if the person is eligible for Medicaid coverage after the termination of the private option. (Terms and Conditions (9)(c))
Not a benefit plan. Arkansas’ Health Care Independence Act of 2013 says “The program is not a perpetual federal or state right or a guaranteed entitlement” and repeats “The program is not an entitlement program.” (ACA 20-77-2405 (i)(2) and (i)(3)) The CMS Terms and Conditions impose procedures during program termination that in no way favor private insurance contract terminations but does resemble a benefit program. The Terms and Conditions say:
- If a private option participant requests a hearing before the date of termination of the program, the State must maintain benefits during the appeal. (Terms and Conditions (9)(c) and (9)(d))
- In addition, the State must provide for administrative review to determine if private option participants qualify for Medicaid eligibility under a different eligibility category while also maintaining benefits. (Terms and Conditions (9)(d))
Financial obligation. Arkansas’ Health Care Independence Act of 2013 imposes minimum federal medical assistance percentages (including 100% in 2014 and 2015 and lower percentages in future years). (ACA 20-77-2405 (h)) The CMS Terms and Conditions include a budget neutrality expenditure cap for the share paid by the federal government. (Terms and Conditions (55)) Budget neutrality provisions are not uncommon, but the percentage limits in the Arkansas act does not provide for an exception for additional obligations to Arkansas due to a budget neutrality expenditure cap for the federal government.
 http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf; National Federation of Independent Business, et al., V. Sebelius, et al., 567 U. S. ____ (2012)
 REP. NANCY PELOSI: “But we have to pass the bill so that you can find out what is in it away from the fog of the controversy.” 3/09/2010; http://www.realclearpolitics.com/video/2013/11/17/david_gregory_asks_pelosi_about_pass_the_bill_so_you_can_find_out_whats_in_it_comment.html
 CMS Terms and Conditions-No 11-W-00287/6 effective Sept 27, 2012 through Dec 31, 2016; see http://www.conduitforaction.org/arkspecialtermsandconditions/
(CFC) Specific provisions of “The Arkansas Health Care Independence Act of 2013” version prior to codification:
Intent and Purposes:
20-77-2102. Legislative intent.
(a) Notwithstanding any general or specific laws to the contrary, the Department of Human Services is to explore design options that reform the Medicaid Program utilizing the Health Care Independence Act of 2013 so that it is a fiscally sustainable, cost-effective, personally responsible, and opportunity-driven program utilizing competitive and value-based purchasing to:
(1) Maximize the available service options;
(2) Promote accountability, personal responsibility, and transparency;
(3) Encourage and reward healthy outcomes and responsible choices; and
(4) Promote efficiencies that will deliver value to the taxpayers.
(b)(1) It is the intent of the General Assembly that the State of Arkansas through the Department of Human Services shall utilize a private insurance option for “low-risk” adults.
(2) The Health Care Independence Act of 2013 shall ensure that:
(A) Private health care options increase and government-operated programs such as Medicaid decrease; and
(B) Decisions about the design, operation and implementation of this option, including cost, remain within the purview of the State of Arkansas and not with Washington, D.C.
(a) The purpose of this subchapter is to:
(1) Improve access to quality health care; 11
(2) Attract insurance carriers and enhance competition in the 12 Arkansas insurance marketplace; 13
(3) Promote individually-owned health insurance; 14
(4) Strengthen personal responsibility through cost-sharing; 15
(5) Improve continuity of coverage; 16
(6) Reduce the size of the state-administered Medicaid program; 17
(7) Encourage appropriate care, including early intervention, 18 prevention, and wellness; 19
(8) Increase quality and delivery system efficiencies; 20
(9) Facilitate Arkansas’s continued payment innovation, delivery 21 system reform, and market-driven improvements; 22
(10) Discourage over-utilization; and
(11) Reduce waste, fraud, and abuse.
20-77-2105. Administration of the Health Care Independence Program.
(a) The Department of Human Services shall:
(1) Create and administer the Health Care Independence Program; and
(2)(A) Submit and apply for any:
(i) Federal waivers necessary to implement the program in a manner consistent with this subchapter, including without limitation approval for a comprehensive waiver under Section 1115 of the Social Security Act, 42 U.S.C. § 1315; and
(ii)(a) Medicaid State Plan Amendments necessary to implement the program in a manner consistent with this subchapter.
(b) The Department of Human Services shall submit only those Medicaid State Plan Amendments under subdivision (a)(2)(A)(ii)(a) of this section that are optional and therefore may be revoked by the state at its discretion.
(B)(i) As part of its actions under subdivision (a)(2)(A) of this section, the Department of Human Services shall confirm that employers shall not be subject to the penalties, including without limitation an assessable payment, under Section 1513 of Pub. L. No. 111-148, as existing on January 1, 2013, concerning shared responsibility, for employees who are eligible individuals if the employees:
(a) Are enrolled in the program; and
(b) Enroll in a Qualified Health Plan through the Health Insurance Marketplace.
(ii) If the Department of Human Services is unable 25 to confirm provisions under subdivision (a)(2)(B)(i) of this section, the program shall not be implemented.
(b)(1) Implementation of the program is conditioned upon the receipt of necessary federal approvals.
(2) If the Department of Human Services does not receive the necessary federal approvals, the program shall not be implemented.
(c) The program shall include premium assistance for eligible individuals to enable their enrollment in a Qualified Health Plan through the Health Insurance Marketplace.
(d)(1) The Department of Human Services is specifically authorized to pay premiums and supplemental cost-sharing subsidies directly to the Qualified Health Plans for enrolled eligible individuals.
(2) The intent of the payments under subdivision (d)(1) of this 2 section is to increase participation and competition in the health insurance market, intensify price pressures, and reduce costs for both publicly and privately funded health care.
(h) The program authorized under this subchapter shall terminate within one hundred twenty (120) days after a reduction in any of the following federal medical assistance percentages:
(1) One hundred percent (100%) in 2014, 2015, 1
(2) Ninety-five percent (95%) in 2017;
(3) Ninety-four percent (94%) in 2018;
(4) Ninety-three percent (93%) in 2019; and
(5) Ninety percent (90%) in 2020 or any year after 2020.
(i) An eligible individual enrolled in the program shall affirmatively acknowledge that:
(1) The program is not a perpetual federal or state right or a guaranteed entitlement;
(2) The program is subject to cancellation upon appropriate
(3) The program is not an entitlement program.
20-77-2108. Effective date.
This subchapter shall be in effect until June 30, 2017, unless amended or extended by the General Assembly.
SECTION 3. NOT TO BE CODIFIED. (a) The implementation of this act is suspended until an appropriation for the implementation of this act is passed by a three-fourths vote of both houses of the Eighty-Ninth General Assembly.
(b) If an appropriation for the implementation of this act is not passed by the Eighty-Ninth General Assembly, this act is void.
SECTION 4. NOT TO BE CODIFIED. The enactment and adoption of this act 13 shall supersede Section 21 of HB1219 of the Eighty-Ninth General Assembly, if Section 21 of HB1219 of the Eighty-Ninth General Assembly is enacted and adopted.
SECTION 5. EMERGENCY CLAUSE. It is found and determined by the General Assembly of the State of Arkansas that the Health Care Independence 19 Program requires private insurance companies to create, present to the Department of Human Services for approval, implement, and market a new kind of insurance policy; and that the private insurance companies need certainty about the law creating the Health Care Independence Program before fully investing time, funds, personnel, and other resources to the development of the new insurance policies. Therefore, an emergency is declared to exist, and this act being immediately necessary for the preservation of the public peace, health, and safety shall become effective on:
(1) The date of its approval by the Governor;
(2) If the bill is neither approved nor vetoed by the Governor, 29 the expiration of the period of time during which the Governor may veto the bill; or
(3) If the bill is vetoed by the Governor and the veto is overridden, the date the last house overrides the veto.
 138.3% higher health insurance premiums (5th highest increase in the nation) http://wallethub.com/edu/obamacare-report-states-benefiting-most-least/1276/#data-and-graphs
 CMS Terms and Conditions-No 11-W-00287/6 effective Sept 27, 2012 through Dec 31, 2016 ; see http://www.conduitforaction.org/arkspecialtermsandconditions/;
 CMS Terms and Conditions-No 11-W-00287/6 effective Sept 27, 2012 through Dec 31, 2016, see http://www.conduitforaction.org/arkspecialtermsandconditions/
 See endnote 7 above, “Triggers.”
 CMS Terms & Conditions, http://www.conduitforaction.org/arkspecialtermsandconditions/