qotd: Arkansas - Poor people need to be taught how insurance works

Kaiser Health News
July 22, 2014
Arkansas Weighs Plan To Make Some Medicaid Enrollees Fund Savings Accounts
By Michelle Andrews

If all goes according to plan, next year many Arkansas Medicaid
beneficiaries will be required to make monthly contributions to
so-called Health Independence Accounts. Those that don't may have to pay
more of the cost of their medical services, and in some cases may be
refused services.

Supporters say it will help nudge beneficiaries toward becoming more
cost-conscious health care consumers. Patient advocates are skeptical,
pointing to studies showing that such financial "skin-in-the-game"
requirements discourage low-income people from getting care that they need.

Michigan and Indiana have already implemented health savings accounts
for their Medicaid programs, modeled after the accounts that are
increasingly popular in the private market. The funds, which may be
supplemented by the state, can be used to pay for services subject to
the plan deductible, for example, or to cover the cost of other medical
services.

The program particulars in each state differ. But both states – and the
Arkansas proposal -- require beneficiaries to make monthly contributions
into the accounts in order to reap certain benefits, such as avoiding
typical cost sharing for medical services. Funds in the accounts may
roll over from one year to the next, and participants may be able to use
them to cover their medical costs if they leave the Medicaid program.

"We believe in consumerism," says John Selig, director of the Arkansas
Department of Human Services. By requiring Medicaid beneficiaries to
make a monthly contribution to a Health Independence Account, "we think
they'll use care more appropriately and get a sense of how insurance works."

Under the health law, states can expand Medicaid coverage to adults with
incomes up to 138 percent of the federal poverty level (currently
$16,105 for an individual). So far, about half have done so. But some
conservatives have objected to the expansion of a government entitlement
program, preferring a private market approach that they say encourages
personal responsibility.

Arkansas and Iowa proposed and received approval from the federal
Department of Health and Human Services for premium assistance programs
that use federal funds to enroll the new Medicaid-eligible beneficiaries
in marketplace plans.

For 2015, Arkansas is proposing to expand its experiment by introducing
the Health Independence Accounts. Nearly all beneficiaries earning
between 50 and 138 percent of the poverty level ($5,835 to $16105 for an
individual) would have to participate through monthly contributions of
between $5 and $25, depending on their income, or face cost-sharing
requirements capped at 5 percent of income by Medicaid rules. In
addition, Medicaid enrollees with incomes over the poverty level could
be refused services if they don't make their monthly contribution and
don't make a copayment. (This year, those with incomes between 100 and
138 percent of poverty already have co-pays.)

Under the new program, any of the private option enrollees would be able
to avoid all cost sharing charges next year by making monthly
contributions to their HIA.

Each month that a beneficiary makes a payment to his or her account, the
state will contribute $15. Unused amounts will roll over from one year
to the next up to a maximum of $200, which can be used by the
beneficiary for health care costs if he or she leaves Medicaid for
private coverage.

Advocates say they're pleased that 175,000 Arkansans have gained
coverage under the Medicaid expansion. But the proposal for next year
gives them pause.

"There are concerns with adding cost sharing to those below the poverty
level," says Anna Strong, health care policy director at Arkansas
Advocates for Children and Families.

Those concerns are well founded, say experts. "This is something that
researchers have looked at a lot," says MaryBeth Musumeci, associate
director at the Kaiser Commission on Medicaid and the Uninsured.
"Overarchingly, premiums and cost sharing have been shown to discourage
or impede folks from getting needed care."

Some experts note that at least 40 states already charge premiums or
cost sharing for at least some beneficiaries. Beneficiaries have skin in
the game already, they say, and they question the value of these special
accounts that add a whole new layer of complexity for people who may not
ever have had insurance before.

"We're creating these incredibly complicated administrative structures,
and I don't think people will understand them," says Judith Solomon,
vice president for health policy at the Center on Budget and Policy
Priorities.

http://www.kaiserhealthnews.org/Stories/2014/July/22/Michelle-Andrews-on-Arkansas-plan-for-Medicaid-savings-accounts.aspx

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Comment by Don McCanne

Arkansas is demonstrating to us the irrationality of basing reform on
ideological concepts divorced from health policy science. Let's look
closer at this proposal for "Health Independence Accounts," their
version of consumer directed health care for very low income
individuals, using the concept of health savings accounts.

* "Nearly all beneficiaries earning between 50 and 138 percent of the
poverty level ($5,835 to $16,105 for an individual) would have to
participate through monthly contributions of between $5 and $25."

* It seems to matter little that these individuals have no
discretionary income since they do not have enough revenues to meet
their basic needs, much less contribute to a savings account.

* If they are able to make their payments, then, according to this
article, cost sharing is eliminated. Wasn't a purpose of the savings
accounts to help pay for cost sharing?

* So what do they suggest is the purpose of the health savings
accounts? They "can be used by the beneficiary for health care costs if
he or she leaves Medicaid for private coverage." So this is a financing
plan for Medicaid that won't be used, but saved until after the person
leaves Medicaid? How does that help?

* For those with incomes between 100 and 138 percent of the federal
poverty level, failure to make a payment into the Health Independence
Account could result in being refused health care services. Is this
really a rational policy for trying to improve health care access for
these low income individuals?

No, it's not about improving health care access. According to John
Selig, director of the Arkansas Department of Human Services, "We
believe in consumerism. We think they'll use care more appropriately and
get a sense of how insurance works."

This is ideology that is totally divorced from health policy science.
Contrast that with ideology that is based on sound health policy science
that results in everyone receiving the health care that they need within
a system that is affordable for all. Of course, that would be a single
payer national health program.

This is sometimes presented as an ideological divide between the
"individual responsibility" and the "we're all in this together"
mindsets, but ideology cannot be divorced from policy science. Health
care should not simply be teaching poor people about how insurance
works. It should be about getting them the care that they need, when
they need it.