MEDICAID
UNFUNDED LIABILITIES EXPAND
UNDER
SO-CALLED “PRIVATE” OPTION
“The
long-term liabilities of the ARKids First program
should be identified.” Policy Foundation
research memos, 2006
(March 2013) The unfunded liabilities1 of the state’s ‘ARKids First2 program,’ a major part of
Arkansas Medicaid are estimated to expand by more than $1 billion under a
so-called “private” option under
review by state legislators.
Under the so-called “private” option
advanced by some Republican legislators about 250,000 Arkansans would receive
federal and state tax dollars to enroll in Medicaid by purchasing private
insurance.
Legislators
Ignore Unfunded Liabilities
Unfunded liabilities represent the
fiscal cost of future commitments. They
are routinely reported by the trustees of federal programs including Social
Security and Medicare. Arkansas public
retirement systems also calculate and report unfunded liabilities. But the state Department of Human Services
(DHS) does not calculate the unfunded liabilities of Medicaid programs,
considering them annual “pay-as-you-go” programs. In the case of ‘ARKids,’
the fiscal commitments to enrollees until they reach age 19, when eligibility
ends, are necessary to calculate the unfunded liabilities.
The legislators advancing the
so-called “private” option do not address unfunded liabilities in their
filings.
Unfunded
Liabilities Would Expand
The Policy Foundation estimated ‘ARKids’’ unfunded liabilities at $3.5 billion in 2012,
according to enrollment, federal reimbursement and average annual cost
data. Unfunded liabilities would
increase by $1.2 billion if a similar enrollment distribution occurred under
the so-called “private” option.
1 The
unfunded liabilities of ‘ARKIds First’ would also
expand under a proposed non-private plan supported by the Beebe administration.
2 ‘ARKids First” was
established in 1997 under Gov. Mike Huckabee with a waiver from the Clinton
administration.