Feel That Breeze? It’s Senator Sample Spinning On The ‘Private’ Option

windmill1Senator Bill Sample has found himself in a heated primary contest with challenger Jerry Neal. Sample’s support of the Obamacare “private” option has become central to the campaign debate. Neal says he is against it; Sample has voted for it repeatedly and still believes it’s the best path for Arkansas’s health care system.
Recently, both candidates spoke before the Garland Good Government Group. During the Q&A period, Sample was asked about his support for the PO. After all, the questioner noted, Sample campaigned against Obamacare in 2012:

I know that you ran against Obamacare, but you were a cheerleader for the private option and I’m curious how you put together the fact that Obamacare in any form, including the private option, is an expansion of government, big government, and as a conservative I (inaudible) you would be against big government, against taxes, and for government out of our lives. And yet the private option puts it all back on top of us. I just don’t quite get the connection.

Sample responded:

Well and I will take, and take a stab and I’m going to answer your question, but I’m gonna say — if you’ve got those questions, I’m having a town hall meeting April the 24th at 6:30 at the convention center and I’m gonna have some experts who can answer that question, but I will tell you this…

At this point, the questioner interrupted Sample and interjected, “I want you to answer, I want you to answer.”
Sample continued:

I’m going to, I just wanted to pitch that in there. Medicaid was going to cost us an additional $250 million this year. It cost us 33 cents on every dollar that we spend for Medicaid. If we can take and implement the private option, it was going to be at zero cost to the state of Arkansas. Folks, I was elected to the Senator of the District 22. I don’t have anything to do with the budget process in Washington DC. I tried to make the best deal that we could or we were going to take and have a full blown Obamacare in Arkansas. We had a hard decision to make, I made that decision, I do not regret that decision.

(By the way, if you’re curious about the town hall meeting that Sample is hosting, you can check out this flier.)
There are a few factual errors in what Sample said and, as Arkansas’s premier private-option fact-checker, I feel like I should do my best to clear some of this up.
1. Arkansans pay federal taxes too, Senator Sample.
Sample’s answer that the PO was going to be “zero cost to the state” implies Arkansans don’t pay federal taxes and therefore, to Arkansans, the program would be “free.” Sample probably meant: there was no cost to the state budget this year. However, Arkansans do in factpay federal taxes (I have some personal experience in this area). But even if Arkansans didn’t pay federal taxes, Sample’s claim still wouldn’t be correct, because …
2. There have been costs to the state this year.
There have been administrative costs associated with the “private” option for this fiscal year, although we don’t know the exact numbers. According to DHS spokesperson Amy Webb, Arkansas receives “matching rates for our federally-funded projects” and the rates “vary between 50 and 90 percent, depending on the type of expenditure.” I asked for a more specific breakdown of how much in state funds are being spent on administering PO. Webb said “Because administrative costs are part of the broader Medicaid budget and not directly tied to the private option, there is no simple way to break out that information.”
I am following up with Webb to see if I can get more information on the administrative costs, but it seems clear that at least some of the cost burden is coming out of the state budget.
And, as this piece from Forbes highlighted a few weeks ago, the program is currently 11% over original projections. If the cost overruns continue and Arkansas does not get a cap increase approved by the federal government, Arkansas taxpayers will likely be on the hook for cost overruns that occur this year.
3. Sample’s math is wrong, and this is bad news for taxpayers.
Sample says that Medicaid would have cost the state an additional $250 million this year without the “private” option. Presumably, he takes that number from this Optumas report that was published before the state passed the PO in 2013. But Sample read the numbers wrong: the $250 million cost in Fiscal Year 2015 for new enrollees was for the woodwork population, and the state would have received the traditional 70% match from the federal government for woodwork enrollees, making the actual estimated FY15 state liability only about $76 million. Sample is mistaken to assume that the “private” option helped address this problem: in fact, expanding Medicaid and implementing the “private” option did not shift any more of the cost burden of this woodwork population to the federal government. The state is still responsible for paying for 30% of the costs generated by this population.
(Oddly, Optumas’s estimates assume that, under expansion, woodwork enrollees shrink both in number and in per-person cost when compared to a non-expansion scenario. I don’t have time to get into this right now, but this is precisely the kind of unwarranted pro-PO assumption that places Optumas’s work in question and calls for another post in the future.)
However, the $76 million cost doesn’t reflect the path the legislature chose. Instead, Arkansas expanded Medicaid — and based on the state’s own estimates, additional Medicaid costs that come out of the state budget for Fiscal Year 2015 will “only” amount to $47 million.
Now, if you use Sample’s government math — and buy into the idea that Arkansas taxpayers should only care about money that comes out of the state budget while disregarding massive increases in federal spending — then perhaps the PO was a good decision for the state. However, that same Optumas report shows that, under the PO’s expansion, Medicaid will cost an additional $1.6 billion in the state of Arkansas overall next fiscal year, with roughly 250,000 new Medicaid enrollees. This entails roughly $1.4 billion more government spending than if we hadn’t expanded.
And keep in mind: these estimates were based on much lower premium prices than what we are actually seeing. According to the new numbers that came out last week, expenditures are greatly exceeding these projections.
Assuming we did have a best-case scenario, by Fiscal Year 2017, the state’s own estimates show that this expansion will suck more from the state budget than not expanding would have. I guess Sample thinks this was a good investment for the state. I strongly disagree.
4. Thanks in part to Sample, we did get “full-blown Obamacare.”
Sample states that his actions helped shield Arkansas from “full-blown Obamacare.” It is hard to see what the basis for such a statement would be. The legislature implemented the two key pillars of Obamacare — Medicaid expansion and an Obamacare exchange. You can call the expansion the “private” option, or you can call it “health care reform,” or I guess you can call it the “American as apple pie” option. But what really matters isn’t what it’s called, but what it is. It’s Obamacare’s Medicaid expansion. The idea that we “saved ourselves” from Obamacare by implementing Obamacare is simply absurd. Thanks in part to Senator Sample, we got “full-blown Obamacare.”
5. There was a chance for the legislature to shield us from much of Obamacare. They passed on that chance.
When Sample says he doesn’t have a vote in DC, he’s correct. But any suggestion that he and other legislators had no control over Obamacare’s impact on Arkansas is flatly untrue. Every state that borders Arkansas has rightly rejected Obamacare’s Medicaid expansion. The Supreme Court gave every state this same opportunity in their ruling on Obamacare in 2012. Arkansas passed on this opportunity; instead, it implemented Medicaid expansion and an Obamacare exchange.
If Sample wants to argue — as other candidates have — that the PO doesn’t have anything to do with Obamacare, I guess he’s entitled to do so. Most observers do not agree that there’s no relation between the PO and Obamacare. In fact, Hillary Clinton has praised the private option as a “brilliant approach” to implementing Obamacare. Furthermore, the state’s own DHS website says:

As part of the Patient Protection and Affordable Care Act (ACA) that President Barack Obama signed into law in 2010, states now have the option to expand their Medicaid programs so that the programs provide health coverage to people making up to 138 percent of the federal poverty level. The federal government will pay 100 percent of the costs for the expansion in 2014, 2015 and 2016, and then slowly decrease the portion it pays to until it is at 90 percent federal funding and 10 percent state funding.

This statement demonstrates that, first, Medicaid expansion is part of Obamacare (ACA) and, second, that states have a choice in whether or not to participate. At this point, about the only people left who believe the “private” option has “nothing to do with Obamacare” are the legislators who voted for it.
Sometimes I feel like a broken record as I write these posts about the weird things candidates say about the “private” option. But as long as legislators — and people who might soon become legislators — keep saying weird, unsupportable things about the program, I feel obligated to keep setting the record straight.

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