By Rob Moritz
Arkansas News Bureau

LITTLE ROCK — Legal challenges notwithstanding, state agencies are already contemplating implementation of the new federal health care reform law in Arkansas, key provisions of which won’t go into effect — thankfully, officials say — for years.

The $940 billion health care reform bill signed into law last week by President Obama expands coverage to more than 32 million uninsured Americans. Some of its previsions take effect immediately, such as closing gaps in Medicare Part D coverage, banning lifetime limits on coverage and prohibiting insurers from dropping coverage because of illness or denying coverage because of pre-existing conditions.

Other provisions will be phased in over years.

Against a backdrop of lawsuits by dozens of states, collectively and individually, challenging the constitutionality of the landmark legislation, the state Legislature is expected next year to begin considering enacting monumental measures from creating a new health insurance exchange to expanding the state’s Medicaid program to accommodate as many as 250,000 more recipients by 2014.

“It’s very complex,” said state Insurance Commissioner Jay Bradford, whose agency will take the lead in creating the insurance exchange, a marketplace where individuals and small businesses can pool their purchasing power to buy insurance.

“What it’s meant to do is to allow Arkansas citizens to purchase their health insurance from an exchange on a more mass basis,” said Bradford. “The theory is, because of critical mass, there will be more competitive pricing and the coverage should be less expensive and be guaranteed without any pre-existing conditions, and it will be in the private sector.”

Individuals and small businesses will be able to sign up for the exchange and local insurance agents will work with the customers to make sure they have the best insurance value, he said.

“In theory, that will fill in a large gap of coverage for a lot of people who are with small companies or individuals who are with companies that don’t have a group health plan,” he said.

Bradford, a former state legislator who owned the state’s largest independent insurance company before taking a job in state government, said the big issue the Insurance Department faces is making sure affordable coverage is available.

Controlling the cost is the challenge, and the cost of services will determine the cost of the insurance, he said.

“The good news is, we’ve got a couple of years, and hopefully the U.S. Congress will get together as a team and initiate measures that will help control costs,” he said.

Federal grants will be available to help implement the new exchange program, and the National Association of Insurance Commissioners is developing model legislation that states can use to fit their individual state needs, he said.

While the Insurance Department wrestles with creating a new insurance exchange program, the state Department of Human Services must prepare for a massive influx that could push the number of Medicaid recipients in the state past 1 million annually. There are currently 750,000 Medicaid clients in the state.

Under the new health care law, the government health program for the poor, the elderly and the disabled is to expand to all non-elderly Americans up to 133 percent of the poverty level. The federal government will pay 100 percent of the cost of the expansion for the first three years, then gradually reduce its share of the cost to 90 percent.

“What we’re focusing on now is making sure we use the next few years wisely to make the upgrades that we need to make to the system to accommodate this population coming in,” said Julie Munsell, spokeswoman for the state Department of Human Services.

Gov. Mike Beebe last week estimated the increased demands on the state Medicaid budget at between $100 million and $200 million.

“Obviously, covering these additional individuals will have an economic impact on health care but also on local economics because you’ll have, in theory, more providers out there providing services, more people in jobs,” Munsell said. “I think there were some estimates that it would create around $2 billion for the (local) economies throughout the state, and that’s good.”

Streamlining eligibility requirements is one thing state Medicaid officials are now working on, she said.
“Now it will be driven by income, so it will make the process a little simpler for determining eligibility because it will focus primarily on income issues,” she said.

“On the flip side, we have to work and try to build up that capacity,” she said, adding there needs to be enough health care providers to handle the influx of new recipients.

“Our health officials … have to work to build capacity to make sure you have enough providers so that there isn’t some bottle neck when people try to access services,” she said.

One thing being considered, Munsell said, is switching from a fee-for-service method, where a provider is paid for every Medicaid-eligible service rendered to the patient, to a managed care plan method, where the provider receives a monthly payment for each Medicaid recipient enrolled and is responsible for ensuring that they have access to all services.

“We need to make sure we are paying for what we need and having it structured in such a way that it’s being used efficiently,” she said.