Red-State Health Reform: Threading the Political Needle
27 Pages Posted: 19 Apr 2015 Last revised: 29 Jul 2015
Date Written: April 17, 2015
Spurred by the Supreme Court’s decision in NFIB v. Sebelius, health reform federalism is flourishing as states experiment with various means of implementing the Affordable Care Act. Implementation has been slow, however, in most states with political environments hostile to “Obamacare,” even though those states have much to gain. Among the red states, Arkansas stands out as an exception.
This essay relates the story of two of Arkansas’s innovative health reform initiatives: the “private option” for Medicaid expansion, extending private health insurance to the state’s lower income residents, and the Arkansas Payment Improvement Initiative, re-orienting provider incentives away from wasteful fee-for-service payment structures toward a more cost-effective value-based structure. Early results are promising: the “private option” has resulted in the highest percentage increase in insurance coverage of any state, and preliminary tracking results from the Arkansas Payment Improvement Initiative show cost savings and quality improvements across several categories of health care interventions. The essay explains how the two initiatives work, and describes the delicate political process by which the state’s political and health policy leaders – encompassing Democrats and Republicans, Medicaid officials and private insurers, hospitals and physicians’ groups – collaborated to take advantage of opportunities for state-based innovation.
Keywords: health reform, private option, payment improvement initiative, bundled payments, Medicaid expansion
JEL Classification: I18, K32
Suggested Citation: Suggested Citation