IN neighboring Arkansas, officials have proposed an alternative approach to the Medicaid expansion endorsed by Obamacare. Under the Arkansas plan, state and federal funds that would otherwise pay to add people to Medicaid will instead buy private health insurance for that population. Those policies would be obtained through a state insurance exchange estab-lished under the federal health care law.
Obamacare supporters say this shows the Obama administration is willing to provide states flexibility. The move certainly reflects a more open-minded attitude than the administration has previously shown; the Obama administration is killing Insure Oklahoma, which provides employers a state match to cover workers' health insurance. But the Arkansas alternative isn't without problems.
Arkansas medical providers like the proposal because they anticipate private plans will pay more than the rates offered by Medicaid. Critics of Medicaid expansion note the program's rates often are substandard. As a result, a significant percentage of doctors in many states refuse to either treat Medicaid patients or accept new ones. The problem is expected to get worse as the program's rolls explode. On the other hand, private insurance typically pays competitive rates, facilitating greater health care access.
However, it's far from certain that providers will get a better deal from the plans offered through Obamacare's health exchanges. The Wall Street Journal recently reported that hospitals will be paid less by insurers participating in plans sold on the exchanges. Providers will be expected to make up the pay difference through the increased number of patients.
In plain English, this means the income of hospitals and doctors will be based on patient volume. The incentives will therefore encourage providers to see the largest number of people in the shortest amount of time. People who appreciate a high-volume, low-profit margin business model when buying a TV from Walmart may not be as excited to have it applied to their health care treatment.