Tuesday, May 31, 2016

"Arkansas Works" Has Only Been Sustained By Welfare Fraud

Last year I asked the question "Is Arkansas' Ruling Class Committing Welfare Fraud on a Massive Scale?" The subject was the way the Beebe administration, and the Hutchinson Administration for that matter, was operating Medicaid expansion under Obamacare. While I may have asked questions, there was no doubt in the mind of State Senator Bryan King. "It's a scam." King said flatly.

New information strongly suggests that he was correct. We don't think of elected officials who we may know socially, or business leaders operating some of the most trusted brands in our state, of being scam artists. Yet the evidence suggests something like that has been going on here for years. The main difference is that instead of just a single operator committing welfare fraud, this was a large number of people who all acted together to do so. Its harder to pin the blame on any one person this way. Attempts to hold people responsible can be met with an endless circle of pointed fingers.
We have contempt on the person who scams the system to collect a welfare check when they have a job on the side. They are welfare cheats. But it turns out that some of the most admired and respected people in our state are also welfare cheats, doing things that in principle normal people would and do go to prison for.
Arkansas' program, call it the "Private" Option or "Arkansas Works",  handles the money differently than most state's Medicaid Expansions. Instead of paying medial providers directly when they render services, this plan pays premiums to a private insurer whether there is any service provided or not. The insurer then uses most but not all of those premium dollars to pay medical service providers. 
A recent Andy Davis article from the Demo-Zette, if you read between the lines, shows how fraud is essential to maintaining this program. The subject was the proposed 14.7% premium increase the providers were asking for. And that was just the average. QualChoice had more "Private" Option enrollees by percent and so they were asking for a bigger increase in premiums by percent. United Healthcare, one of the largest providers in the nation, recently announced that they were leaving the state and would no longer offer an Arkansas Works insurance plan.
I have to admit that I did not put the scam together until King recently pointed me in the right direction. The large premium increases should have tipped me off, but I was misled by the fact that ten other states are seeing even larger premium increases as Obamacare continues to do what central planning always does, every time, without exception- fail. It fails because people find ways to game the system, and are more nimble than the system. They can exploit new rules faster than the system can enforce them.
In this case, the political establishment in this state, Republican and Democrat, broke the law to game the system. This was not some high-school dropout in Forrest City doing it, this was the upper crust doing it. They also violated federal law in the process because they failed to vet the eligibility of people in the program. They auto-enrolled everyone they could, accepted the rest, and basically never checked anything. Then they bragged about how many people were in the program. And the Federal Government was paying premiums to Arkansas insurers for each and every one of them. If someone was dead, they were still paying. If they were in prison, they were still paying. If they were an illegal alien who moved back to Mexico, they were still paying. If they won the lottery or got a job with health insurance, they were still paying. If someone was ineligible for the program, they did not want to know because they got "free" money from Washington for every enrollee.
Arkansas insurers were getting premium payments from Washington (actually from the next generation because this thing is largely funded by generational looting). The state was getting a share of it because the premium dollars were taxed as income. This was, and is, welfare fraud on a massive scale.
Once they were finally forced to look, the state discovered that 25,000 enrollees in the Arkansas Blue Cross Plan were not eligible. That was ten percent of the total number in the "Private" Option and it does not even count the ineligible ones in the United Health Care and QualChoice plans! Further, they have not even looked at the eligibility of all of the enrollees, only those who have been in the program for more than a year. The odds are very strong that they will find thousands, or even tens of thousands, more who are ineligible once they bother to look at the eligibility of those who have enrolled in the past year.
Arkansas Works cannot work without defrauding the Federal Government. It needs the premium dollars from all those ineligible people who are enrolled in the program but not making any claims because they are dead, moved out of the country, found a job with health care etc.... That must have been what United Health Care realized. They are a national outfit, so they had the option of fleeing the state. Arkansas Blue Cross and QualChoice are neck deep in revenues obtained by fraud, but they are Arkansas companies who have no place else to go. 
The reason these companies need a 14.7%, or 23% in the case of QualChoice, increase in their premiums is because they are no longer getting premium payments for dead people, prisoners, those who have left the state, and those who have obtained health coverage from their job. These insurance companies were getting money for this huge pool of people who never used their services and who in fact were not eligible for them.. It was pure profit- albeit profit obtained by illicit means. Now that many of those people have been taken off the roles the insurance companies find they can't cover the persons who are actually using the program with the premium dollars allotted. Combine this with the underlying inflation in health care costs, and the numbers don't add up.
The article said that the average monthly cost of a person on the "Private" Option/ Arkansas Works was $528.97 vs. $548.19 for those on traditional medicaid. This statistic, like almost everything else about this program, is deceptive. For one thing, when someone applied for the "Private" Option that was really sick, we sent them to traditional Medicaid instead. So for the past four years traditional Medicaid has been getting the high cost people that they did not want on the Scam Program. In addition, the traditional Medicaid rolls still have some fraud in them, but the state actually cared about rooting it out of that program, so the level of fraud is far from the massive levels present in the scam program. 
That fraud held the overall cost per person down because it included premiums from dead people who never filed a claim, prisoners who never filed a claim, and the like. If the numbers corrected for those two factors, the "Private" Option / Arkansas Works would be much more expensive per person. It just stands to reason that you can't build a new Medicaid Program with a private facade in front of it as inexpensively as you can just build  the program without the facade.
Look, I am a Localist. I am not a fan of an intrusive federal government at all. But what has been done here, by some very prominent people in this state, is defrauding a federal program. People go to prison for that sort of thing, and they should go to prison. I don't want the FBI to come to Arkansas and start cuffing people. I don't want that. But I accept that it will be a necessary consequence of our political class committing massive fraud. They should end the fraud. Immediately. And since Arkansas Works won't work without the dollars from the fraud to prop it up, they should end that too.


Blogger Mark Pillow said...

I'm glad some else has picked up on the way the State skims off the top by taxing the same income (tax dollars transformed into premium payments).
The same happens when the Minimum wage is raised in other states...that is to say - those states aren't concerned with the wage earner making a living wage at all - there motive is to push up the earners tax bracket above the low income exemptions. Now those former min. wage earners are paying income tax not getting it all back. Because those former Min Wage earners are making so much more - they are also no longer eligible under the income requirements for benefits, so the State improves cash flow and reduces costs.Who really pays - All OF US every time we buy a $7 dollar burger that used to cost $5...

2:12 PM, May 31, 2016  
Blogger Conduit said...

Welcome to the conversation. We have been telling all, including legislators this very thing since 2013.

7:51 PM, May 31, 2016  

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