Arkansas is making money by allowing fraudulent enrollees in the Private Option.

road-sign-464653_640Arkansas failed to verify the eligibility of enrollees in the Private Option. The failure to do the required verification allowed thousands of out-of-state residents and even dead people to be enrolled in the program at taxpayer expense.

Now it comes to light that Arkansas made money by allowing the fraud. This windfall is a result of Arkansas’ scheme to make the federal government pay a higher percentage of costs than is supposed to be allowed.

Under the Private Option (Arkansas’ version of Obamacare Medicaid Expansion), Medicaid money is funneled through insurance companies to buy health policies to cover each enrollee. Arkansas receives an insurance premium tax on each one of those policies. Currently Arkansas pays NONE of the cost of the Private Option but is making money off of the policies by charging an insurance premium tax on each of the policies. Each bogus enrollee on the Private Option means more insurance premium tax money for Arkansas!

Charging the insurance premium tax on the Private Option policies is a device to make the federal government pay more than its share of the Private Option. Until 2017, the federal government is paying the full cost of the Private Option. In 2017 Arkansas’ share is supposed to be 5% and in 2021 Arkansas’ share is listed as 10%.  But by Arkansas charging an insurance premium tax the federal government ends up paying a higher percentage.

A recent report by the Stephens Group claims the Private Option saves Arkansas money and included revenue from the insurance premium tax on the policies.  The report did not say how much Arkansas is now receiving, but estimated in 2017 Arkansas will receive $37 million from insurance premium taxes on Private Option policies.

Thirty seven million dollars is no small amount!  It is more than the $35.6 million combined amount of appropriations this year for the Department of Arkansas Heritage Fund Account $6,608,765, the Arkansas Agriculture Department Fund Account $17,741,021, the Department of Labor Fund Account $3,227,555, the Arkansas Department of Environmental Quality Fund Account $4,252,178, and the Department Of Workforce Services Fund $3,864,840.

Some of you may be thinking “Good for Arkansas for skinning the feds out of their money.”  Think again! As a federal taxpayer you still get to pay for those federal expenditures. The federal money is coming out of your pocket, plus lots of interest, since the United States keeps borrowing money from other countries to stay afloat with over $18 trillion debt.

It is time for a federal investigation of the insurance premium tax scheme to bilk more money out of the federal government.  The federal Centers for Medicaid and Medicare Services (CMS) is not going to care how much it spends of your money because it needs Arkansas to stay chained to Obamacare Medicaid Expansion, since Arkansas is the only southern state to adopt Obamacare Medicaid Expansion.

The U.S. Government Accountability Office (GAO) will care.  It is time to call the GAO to investigate this scheme.