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Arkansas Gets Approval for Safety Net Program

Arkansas received federal approval to begin a low-cost, limited benefit health insurance plan for businesses. In early March, the Centers for Medicare and Medicaid Services approved a Health Insurance Flexibility and Affordability waiver that allow federal funding for the Arkansas Safety Net Benefits Program. Under this initiative, firms with fewer than 500 employees that have not provided health coverage for at least one year will be eligible to purchase a "safety net" plan, as long as all uninsured workers who are eligible participate.

The plan will cover six physician visits, seven days of inpatient hospital care, and two outpatient hospital procedures or emergency department visits each year and two prescriptions per month. The state will also enhance efforts to reduce smoking and obesity. Employers will be required to contribute monthly premiums of $15 for workers with annual income up through 200 percent of FPL and $100 for higher-income workers. Participating workers will pay annual deductibles of $100 and 15 percent of the cost of services; their out-of-pocket costs for the covered services will be capped at $1,000 per year.

The program will be funded with $18 million from the 1998 national tobacco settlement as well as federal government Medicaid and SCHIP contributions. [1] The state plans to make the program available in the fall of 2006 and begin offering benefits to eligible employees and families in early 2007. Although there are concerns among some consumer groups that the plan provides inadequate protection, its supporters claim that some coverage is better than none. Enrollment is capped at 15,000 parents and childless adults during the first two years. The state estimates that, over five years, 50,000 workers with annual incomes under 200 percent of FPL and 30,000 workers with higher incomes will enroll in the safety net plans.

[1] The federal government will pay 82 cents of each dollar spent by the state for workers with children through SCHIP, and 73 cents of each dollar spent for workers without children through the Medicaid program.

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