Arkansas Works – The Private Option

Modern Medicaid Alliance Featured Medicaid Solution: Arkansas Works – The Private Option

The Challenge

In 2013, the uninsured rate in Arkansas was 27.5% – notably higher than the national average of 20%. Legislators in the state wanted to reduce that rate and expand coverage to more people, while stabilizing the state’s insurance market rather than growing the existing Medicaid program.

Medicaid Solution

That same year, the state secured a Section 1115 federal waiver from the federal government that allowed them to offer commercial health insurance to residents eligible for Medicaid under the Affordable Care Act. The innovation has widely become known as “Arkansas Works” or “The Private Option” as the state offered private health insurance to individuals who would otherwise qualify for expanded Medicaid. Notably, the private coverage available to this population had to meet several of the same criteria that Medicaid met in other states. For example, residents with income below 100 percent of the federal poverty level (FPL) were not subject to cost-sharing for covered services and those with incomes above the threshold faced lower cost-sharing obligations than they would signing up for traditional commercial coverage.

Arkansas kept its traditional Medicaid program that was already in place for beneficiaries, and directed new enrollees who needed long-term services and additional support to the Medicaid program. Similarly, people whose need for services put them in the top 10% of costs based on their prior utilization were also referred to the traditional Medicaid program. This helped insurers better predict the state’s risk pool and establish premiums, leading to a more stable market.

Medicaid Results

As a result of the private option solution, the uninsured rate in Arkansas dropped from 27.5% in 2013 to 15.6% in 2015 – the second largest improvement in the country. It also improved access to care and health outcomes. The Arkansas Hospital Association found a 5.8% growth in use of hospital outpatient clinics from 2013 to 2014.

Recent research has found that low-income adults in Arkansas reported fewer visits to the emergency department, higher quality of care, and more primary/preventive care than their low-income counterparts in Texas – a state that did not expand Medicaid. Another survey found that the percentage of people reporting cost-related delays in care and skipping medication because of cost declined in Arkansas.

Hospitals in the state have also reported less uncompensated care and the state’s health insurance marketplace has seen increased competition and stability. Health insurance premium increases over the past three years averaged less than 5.4% per year and a 9.1% increase announced for 2017, landing far below increases announced in many other health insurance marketplace states.

For Arkansas, Medicaid works.

“Perhaps the most important impact of the Private Option is its potential to improve the health of Arkansans. Hospitals already are seeing people get necessary care they could not have afforded without their new insurance coverage. The Private Option is leading to healthier families, a healthier workforce and stronger communities in our state.”Bo Ryall, President & CEO of the Arkansas Hospital Association