Arkansas Medicaid Expansion: An experiment in anti-coordination

I've seen a lot of talk about the decision to let Arkansas expand Medicaid by having people buy private insurance policies on the Exchange.  Much of the discussion focuses on cost, in that private policies cost much more per person than does Medicaid coverage.  That's a problem if you think we spend too much on health care.  But it may not be the worst one.

The Medicaid expansion population is people with incomes below 133% of the federal poverty level.  Per a KFF Brief this population has a household income distribution as follows (2013 FPL level for a single adult in parenthesis):

Less than half of FPL ($5,745)  - 49%
Between half and 100% of FPL ($11,490) - 30%
Between 100% and 133% of FPL ($15,282) - 21%

So Arkansas is telling a population, roughly half of whom make less than $6,000 a year, to go shop for insurance policies on the exchange.  Gee, I wonder what could go wrong.

• Are these people literate?  It's awful hard to shop for a policy when you can't read.
• Do they have homes?  How will they manage all the paperwork that goes with private insurance when they don't have a permanent mailing address?
•  Most important, will they understand their policies?  Understanding the basic terms and conditions, such as when emergency room use will be covered or which providers are in network or what kind of pre-authorization is required is critical to effectively using an insurance policy.  Mess that up and you are functionally uninsured. 

Using the exchanges to provide insurance for people in poverty strikes me as the worst of all worlds.  It inflates premiums in the exchange as community rating forces everyone else to pay for a sicker population, it soaks the nation with paying their full premiums since they have no money to pay it themselves, it hurts the Medicaid population as they'll put off care once they get a "shock" bill because they didn't understand their insurance, and it will soak hospitals when that population defaults to the local ER for safety net care which may or may not be reimbursed by insurance.

Oregon is investing a lot of resources into Coordinated Care, ensuring that the Medicaid population gets the most medically-effective and cost-effective care possible.  Arkansas, and states that follow them are embarking on a bold experiment in Anti-Coordination.  Instead of the hard work of aligning incentives, resources, and purpose they are closing their eyes and throwing money at the problem.  You don't need to be an actuary to guess how that will work out.