A study commissioned for the Arkansas Center for Health Improvement under the Arkansas Department of Health presents a glowing set of conclusions for expansion of Medicaid enrollment in Arkansas, as envisioned under the Patient Protection and Affordable Care Act, which project net positive impacts upon the economies of Southwest Arkansas counties, but with a catch.
The study, conducted by RAND Health, projects positive economic impacts totaling some $26 million across seven counties in Southwest Arkansas, but admits those impacts are based upon certain assumptions which were built into the study, including a delay to those economic impacts until after the State of Arkansas has assumed 10 percent of the cost of the expanded program in 2014.
“We expect 2016 to be close to the 'steady state' for the effects of the ACA because many of the law's components do not begin until 2014 and it will take a couple years for the population to fully react,” the study states.
The study also assumes “perfect enforcement, meaning that everyone subject to the penalty will pay,” once the “penalty” provision of the ACA, commonly called Obamacare, becomes active for people who refuse to buy health insurance or fail to enroll under Medicaid.
Cuts to the federally funded Medicare reimbursement of hospitals are expected to be deep under the ACA, and are balanced against the anticipated benefit of the Medicaid expansion's economic impact, according to the study.
“The Medicare cuts represent money no longer being sent to the state and are calculated by taking CBO's (Congressional Budget Office) estimate for the 2016 Medicare cuts and scaling them based on Arkansas's share of Medicare spending,” the study states. “These cuts include the Medicare and Medicaid Disproportionate Share Hospital (DSH) payments made to hospitals that have a higher than average share of low-income patients.”
That change shifts the entire burden for “uncompensated care” directly to local hospitals, the study states.
The study notes that, because Arkansas' population is too small to apply the model used in the study absolutely, its results were “weighted” to determine economic impacts by county. As a result, the economic impacts presented for Hempstead, Howard, Lafayette, Little River, Miller, Nevada, and Sevier counties in Southwest Arkansas are weighted and calculated based upon a “multiplier effect” within the general economy, according to the study.
“An inflow of federal funds under the ACA provides income that will be spent in the broader economy,” the study said. “Thus, for every dollar spent by the government, there is a multiplier effect that will have a broader impact on the state Gross Domestic Product.”
Based upon the study's conclusions, Arkansas stands to gain some $750 million from Medicaid payments, another $850 million from compulsory insurance exchange purchases, and lose $1.1 billion in Medicare and other federal funding, for a net economic impact estimated at $430 million. The figures also represent a decrease in state spending on uncompensated care of $67 million.
Page 2 of 2 - Those figures translate from a 2016 statewide baseline Medicaid enrollment estimated at 675,000 residents, which would climb to 865,000 residents under ACA, and a total of 288,000 residents enrolled in non-group a insurance exchange, to decrease uninsured residents from a baseline of 571,000 to 170,000 residents in 2016.
Based upon the study, the “weighted” economic impact for the seven counties in Southwest Arkansas breaks down as follows:
--Hempstead County: Exchange subsidies, $7 million; Medicaid, $7 million; Federal cuts, $9 million for a net change of $6 million.
--Howard County: Exchange subsidies, $4 million; Medicaid, $4 million; Federal cuts, $6 million for a net change of $3 million.
--Lafayette County: Exchange subsidies, $2 million; Medicaid, $3 million; Federal cuts, $4 million for a net change of $2 million.
--Little River County: Exchange subsidies, $4 million; Medicaid, $4 million; Federal cuts, $6 million for a net change of $3 million.
--Miller County: Exchange subsidies, $13 million; Medicaid, $10 million; Federal cuts, $17 million for a net change of $8 million.
--Nevada County: Exchange subsidies, $3 million; Medicaid, $2 million; Federal cuts, $4 million for a net change of $1 million.
--Sevier County: Exchange subsidies, $5 million; Medicaid, $6 million; Federal cuts, $7 million for a net change of $6 million.
At present, Arkansas faces a shortfall in Medicaid funding, and state leaders have reached a broad consensus that at least some surplus revenue should be used to make up the difference.
Democrat Governor Mike Beebe has proposed using $140 million from the projected budget surplus to cover the next two years, but incoming House Speaker Davy Carter, of Cabot, and Senate President Pro Tempore Michael Lamoureaux, of Russellville, both Republicans want to cover all of the pending shortfall cuts. And, neither legislative leader wants to expand Medicaid enrollment as it is considered under Obamacare.
"Essentially the scope of the expansion has been limited to all or nothing," Lamoureux has told the Associated Press. "That makes it very hard to have an agreement."
Beebe told AP he's willing to talk with federal officials to see how much flexibility the state has on expansion if lawmakers are able to find a compromise. But he later warned: "Let's be realistic. I don't have any magic wand, and I don't think (Carter and Lamoureux) think I do."