The Competition Vacuum in the “Private” Option

competition mapYou might recall that one of the selling points of the “private” option was market competition. Competition among insurance carriers was going to lower prices and improve the quality of services. Indeed, the actuaries who estimated the costs of the “private” option relied on the low prices that competition would create. Our insurance commissioner even explained that the high number of carriers that were participating – four! – was triggered by the “private” option.

In reality, market competition across Arkansas was just another broken promise of the “private” option. A week ago, the state Department of Human Services revealed that (because of a pending merger) it had blocked QualChoice, one of the four providers, from enrolling new enrollees — and that it had capped the number of PO enrollees at 1,280. When will the cap be lifted? It isn’t clear.
But there’s still lots of competition in the system, right? Actually, no. That’s because the insurance providers only do business in particular districts (or “rating areas”). The only insurers who are providing “private” option contracts in 4 out of 7 rating areas – which is the majority of the state – are currently part of Blue Cross/Blue Shield. That is, in four rating areas – Northeast, Southeast, Southwest, and South Central – Arkansans were given monopoly provision, not competition, with respect to the “private option.” (Unless your idea of competition is when Blue Cross/Blue Shield competes with Blue Cross/Blue Shield.)
In short, nobody can argue with a straight face that the “private” option provided competition across the state. The architects of Medicaid expansion promised that they’d create a system containing market competition across Arkansas. They failed.

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One thought on “The Competition Vacuum in the “Private” Option

  • April 11, 2014 at 7:46 pm
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    See the article on todays American Thinker, there is a great chart from the Heritage Fdn. for the legislators who are able to read. 4-11-2014

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