When policymakers discuss health care, they often talk about “bending the cost curve” rather than “cutting costs.” That’s because costs have increased so much, for so long, and seemingly so inevitably, that anything beyond “bending” sounds unrealistic.
In recent days, Arkansas has made two announcements indicating it actually is bending the cost curve, at least temporarily. In fact, in one way it even cut costs.
On Friday, the Arkansas Insurance Department announced next year’s rate increase requests made by insurers on the insurance exchange. That’s the online marketplace for individuals and small businesses created by the Affordable Care Act, otherwise known as Obamacare. It’s where I buy my family’s insurance.
The requests were notably low. Blue Cross, the largest insurer with 186,510 affected lives, requested a 4.4 percent increase. Ambetter, which covers 85,373 people, asked for 4.6 percent. Qualchoice, which covers about 31,000 between its two plans, requested 1.5 percent for one plan and 1.06 percent for the other.
In comparison, Blue Cross last year raised its rates 14.2 percent, while Ambetter’s increase was 21.4 and Qualchoice’s plans both increased about 25 percent.
Again, we’re bending the cost curve, not cutting costs. This year’s requests are all increases, and all of them but Qualchoice’s are higher than the overall inflation rate. Even this is unsustainable if it continues indefinitely.
Still, it’s good news. Moreover, Arkansas’ rate increases will probably be among the lowest in the country. In fact, the state’s increases have been lower than the national average in recent years.
One reason is the Arkansas Works program, which uses federal dollars to cover 270,676 Arkansans, as of the beginning of July, on those same insurance plans.
The program was created in 2013. It followed a U.S. Supreme Court ruling that states could choose whether or not to expand their Medicaid populations under Obamacare to cover people with incomes up to 138 percent of the poverty level. Medicaid is a federal-state partnership serving the poor and others. Many Republican-leaning states didn’t expand. Arkansas did. However, instead of just making Medicaid bigger, some Republican legislators and Gov. Mike Beebe’s administration enrolled beneficiaries in private insurance plans. Gov. Asa Hutchinson has embraced the expansion and added a work requirement, calling it Arkansas Works.
The program serves many Arkansans who otherwise would not have insurance, and it also doubles the population on the exchange from about 300,000 to about 600,000. Generally, the more people who are insured, the lower the cost per person because it spreads the risk. It’s especially important to get young and healthy people into the pool, because they don’t require much care. Insurance costs a lot of money if it only covers unhealthy people.
Arkansas Works is an innovative program, but it justifiably has its critics. It’s an expansion of government involvement, and there’s no free lunch. This year, the federal government will pay 94 percent of the cost, totaling about $1.9 billion. That money doesn’t come from the sky; taxpayers provide it. Moreover, that’s the same federal government that’s $21.3 trillion in debt. Arkansas Works is a drop in that bucket, but a bucket is filled drop by drop. Arkansas is responsible for $104 million this year. By 2020, the federal match will drop to 90-10, so Arkansas’ share will increase.
I mentioned two announcements. On July 31, the Department of Human Services said Arkansas’ Medicaid program spent $22 million less in fiscal year 2018 than the year before.
That’s not just bending the cost curve; that’s a cut.
This happened primarily because fewer people are being served by Medicaid, including Arkansas Works. In fact, there were 4,000 fewer covered by Arkansas Works in July than in June. DHS and the Hutchinson administration have made changes to cut costs and improve efficiencies, but a lot of the good news is due to the strong economy. People who have jobs need fewer government services. But the economy won’t be strong forever.
Over the long term, health care costs will increase until the system’s fundamental issues are addressed. There aren’t enough incentives to provide care efficiently. Providers are paid more to treat us than cure us or help us stay well in the first place. Technology and drugs are expensive. Americans have unhealthy lifestyles, and we’re aging as a society.
Until most of those things change, we’ll be talking about bending the cost curve, not cutting costs, most of the time. But for now, this was a good week.
Steve Brawner is a syndicated columnist in Arkansas. Email him at firstname.lastname@example.org. Follow him on Twitter at @stevebrawner.