Saving Medicaid: Sensible, Free-Market Based Reforms for Arkansas

Mike Beebe can make it rain money -- we just have to say "yes."

Mike Beebe can make it rain money — we just have to say “yes.”

I was shocked to hear Governor Beebe in his “state of the state” address a few weeks ago that expanding Medicaid “will create additional private-sector jobs. We just have to say yes.” I was equally shocked to read this statement from Arkansas Business in their “legislative wish list:”

“Expand Medicaid to the quarter of a million Arkansans lacking health insurance…you will be preserving rural hospitals, jobs, and and the health of your fellow citizens.” 

Saving jobs by accumulating additional national debt? Preserving health by putting 250,000 more people on a program that’s on the brink of collapse? And, Gene Jeffress says Obamacare can heal people! Is there anything Obamacare CAN’T do? Perhaps Governor Beebe and the editorial board at Arkansas Business know a lot of things about economics that we don’t. Or maybe they just like each other.

Meanwhile, back on planet earth, I have offered some reasons why I think Medicaid expansion is the wrong choice for our state. (And for some analysis from a real genius — a guy that gets paid to think — you’ll want to click here.) 

Now I’d like to suggest some alternative Medicaid solutions — because expansion is clearly not the only option, nor it is the most prudent one. Here are some things the legislature can do that might actually ease the burden of Medicaid off of taxpayers and allow for some economic growth:

1. Follow Florida’s lead. The state of Florida has implemented a series of reforms that have led to higher patient satisfaction, better access to specialists, and savings of over $100 million. Win, win, win. How did they do it? Not by throwing more money at the problems, like some in Arkansas have proposed, but by implementing free-market ideas such as choice, competition, and incentives:

  • They created a “Medicaid marketplace” of plans
  • Allowed Floridians to customize benefits
  • Provided choice counseling
  • Instituted an enhanced benefit reward system
  • And provided an “opt-out” for private coverage

These are smart, pro-free market based ideas that we have previously analyzed and that Arkansas can and should adopt in order to save Medicaid for those who truly need it. Continuing to spend billions of dollars the federal government is “giving” us that they don’t have is not a sustainable or reasonable path forward. For Arkansas lawmakers, it shouldn’t be an option.

2. Eliminate fraud, waste, and abuse. What’s being proposed by the Governor and those on his side of this issue is not reform — it’s simply a policy of pretending there are no problems with our state’s Medicaid system. But they’re wrong. The system is rife with abuse as most people know. How can it be eliminated?

  • Work to prevent fraud by instituting a database for all claims-based data to prevent overpayments, data loss, or manipulation.
  • Institute automated reimbursement and program reviews to prevent errors and overbilling.
  • Implement a fraud investigation programs. (These three suggestions have been proposed previously by Rep. Bruce Westermanread his bill here.)

All of these are reasonable reforms, none of which will hurt the poor and all of which will work towards ensuring that those who need Medicaid can get it.

3. Institute co-pays for Medicaid patients. Rep. Mark Biviano floated this idea in my interview with him before the session. Private insurance coverage often requires their enrollees to pay co-pays. Doing so for public plans will accomplish two things: first of all, it will offset some of the costs. Secondly, it will give enrollees a vested interest in their health care, or “skin in the game” as the saying goes. If Medicaid patients are required to pay a fee when they go to the doctor, they’ll be less likely to rush to the doctor’s office every time they get a nosebleed.

Keeping in mind that the purpose of Medicaid is to provide health care coverage for those who cannot afford it, the co-pays should not be unreasonably high. A sliding scale based on overall income seems like a reasonable idea. While some will not be able to pay as much as others, everyone can pay something and help offset Medicaid’s massive deficit.

This is not intended to be an extensive list of ideas for Medicaid reform, but it is a start. Whatever reforms the legislature pursues, they should be based on free-market ideas that will begin to ease the massive fiscal burden of Medicaid of the private sector and allow for real economic growth.