Arkansas Considers Insurance Program for Self-Employed

Only 5,000 Arkansans of a potential 50,000 have enrolled in a state program to provide health insurance to low-income workers through their employers.

The Arkansas Department of Human Services launched ARHealth Networks in 2006 and expanded the enrollment cap in October to 50,000 members. NovaSys Health administers the plan.

Glen Mays, an associate professor at the University of Arkansas for Medical Sciences, says the program hasn’t met initial expectations. Enrollment “is certainly not what you’d hope for, given there’s a much larger population of working uninsured adults,” he said.

DHS last year scrapped a drug discount program because of lack of participation. The program, Arkansas Rx, was designed for working-age uninsured people. But the department now is considering whether to let self-employed people take part in ARHealthNetworks.

Currently, the program is limited to companies of two to 500 full-time employees. About 1,000 companies are involved, according to NovaSys Health. A study in August said program enrollment would likely increase by some 7,000 to 10,000 members if self-employed people and their spouses were eligible.

But state officials are concerned that the amount of health-care services used per member – as well as administrative costs – would increase if the program were open to the self-employed.

“The dynamics change drastically, or substantially when you go to an individuals-based program,” said department spokeswoman Julie Munsell.

For the current fiscal year, ARHealthNetworks is expected to cost about $11.5 million, with about $2.9 million coming from the state’s tobacco settlement money and $8.6 million coming from federal sources.

ARHealthNetworks uses Medicaid money to help small businesses with low-income workers pay for premiums for a limited-benefit health insurance program. Premiums are $25 a month for workers whose incomes qualify for a subsidy, and $200 for those who don’t. The program is offered only through qualified employers who haven’t offered a group health plan in the past 12 months.

Benefits include six doctor’s office visits a year; seven inpatient days per year; two prescriptions per month; two major outpatient services a year; and a maximum annual benefit of $100,000.

Mays said other states also have had difficulty stimulating demand for similar programs. He said it is tricky to design a program that balances affordability with attractive benefits.

For companies that participate, the program requires all low-income, full-time employees who don’t have individual coverage or coverage through a spouse to enroll. But Mays said some low-income people, particularly young people who are gambling that they won’t get sick or injured, might not want what limited pay they already receive to go toward health coverage.

Ed Haislmaier of The Heritage Foundation, a conservative think tank, says tying such insurance programs to employers limits their success.

“If you have low-wage workers who change jobs frequently, how does targeting the employer solve the problem,” he said.

Haislmaier notes that some uninsured low-income workers don’t want to pay for coverage when they could receive treatment by being considered indigent in the emergency room. And they are approaching companies who already have decided not to offer coverage.