The Private Option for Medicaid Expansion

I appreciate that the Missouri version of Arkansas-style Medicaid Expansion is being circulated without name as "Rough Draft No. One."  The shoe fits.  As far as I can tell, the proposal mimics in essentials Arakansas' 1115 waiver application.  You can see that here:  http://humanservices.arkansas.gov/dms/Documents/Final%201115%20Waiver%20Materials%20for%20Submission.pdf and, whatever you think of it, it is no rough draft.  Its drafters have given considerable  thought to "leveraging the efficiencies of the private market to improve continuity, access, and quality for Private Option beneficiaries."  

I think the "rationale" section of the Arkansas 1115 waiver application is the most interesting. "Arkansas Medicaid provides rates of reimbursement lower than Medicare or commercial payers, causing some providers to forego participation in the program and others to "cross subsidize" their Medicaid patients by charging more to private insurers. The Demonstration will rationalize provider reimbursement across payers, expanding provider access and eliminating the need for providers to cross-subsidize."

Now, that's a pretty tall order because cross-subsidization and perverse cross-subsidization is at least as present between and among commercial insurance products as between government funded health insurance and commercial insurance.  It is also an interesting take on the problem of low Medicaid participant provider reimbursement rates in Arkansas.  After all, states establish their own Medicaid provider payment rates within federal requirements and Arkansas has not chosen to be at the top of the permissible range.  "Indeed, there are 23 states with higher Medicaid reimbursement rates (relative to Medicare's)" (Avik Roy in Forbes on March of 2013).

What is the message: we need the commercial insurance market to save Medicaid from ourselves?

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