POLICY
FOUNDATION FILES PUBLIC COMMENT
ON
MEDICAID EXPANSION
(September 2014) An amendment by
Arkansas Medicaid expansion proponents is inadequate because it fails to
estimate unfunded liabilities, according to a public comment submitted to state
and federal authorities by the Policy Foundation. The comment notes, "An estimate of
unfunded liabilities is consistent with principles of open government, i.e., transparency.
The Policy Foundation's public comment
contends "a good faith effort" by the state Department of Human
Services to "estimate these liabilities would create a more transparent
policy process serving the people of Arkansas."
Other
Government Programs Estimate Liabilities
The comment notes, "Other
programs (Medicare,1
Social Security,2
and state retirement systems) estimate "actuarial balances,"
"unfunded obligations," or "unfunded liabilities." It adds,
"These terms, in the 21st century, are cited in news media" such as The N.Y. Times and Arkansas Democrat-Gazette.
Identifying
Unfunded Liabilities Is An Accounting Reform
The Foundation
"maintains accounting and finance" are "central to "AKA Private
Option." DHS "should estimate
the program's unfunded liabilities" using
"age enrollment (caseload); life expectancy (mortality); quantity of
services (utilization), and estimated state reimbursement for service units
(price)"3
data." The findings should be shared with the people of Arkansas.
1 2014
Annual Report Of The Boards Of Trustees Of The Federal
Hospital Insurance And Federal Supplementary Medical Insurance Trust Funds. The report discusses "long-range
actuarial status" including negative actuarial balances for three
valuation periods (25, 50 and 75 years) ,' pp.
62-74. The Centers for Medicare and
Medicaid Services define actuarial
balance as follows: "The difference between the summarized income rate
and the summarized cost rate over a given valuation period."
2 The
2014 Annual Report Of The Board Of Trustees Of The
Federal Old Age and Survivors Insurance And Federal Disability Insurance Trust
Funds. The
Glossary (pp. 235-36) defines unfunded obligation as follows: "A measure of the shortfall of
trust fund income to fully cover program cost through a specified date after
depletion of trust fund asset reserves. This measure is computed as the excess of the
present value of the projected cost of the program through a specified date
over the sum of: (1) the value of trust fund reserves at the beginning of the valuation
period; and
(2) the present value of the projected non-interest income of the program through a
specified date, assuming scheduled tax rates and benefit levels. This
measure can apply for all participants through a specified date, i.e., the open group,
or be limited to a specified subgroup of participants."
3 The limits of another
approach, using only three factors at the federal
level, is discussed in Medicaid's 2013 Actuarial Report.