Arkansas Gov. Signs Changes to Private-Option Medicaid Plan

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By Christopher Brown

April 11 — Arkansas Gov. Asa Hutchinson (R) April 8 signed a bill that will preserve and make changes to the state's private-option approach to Medicaid expansion, adding requirements that participants make premium payments and participate in job training programs.

The House April 7 had approved its version of the bill, HB 1001, by a 70-30 vote. The Senate approved an identical version, SB 1, the same day by a 25-10 vote.

The votes were significant in demonstrating how much support there is in the Arkansas Legislature for continuing some version of the private-option approach to Medicaid expansion, which has been a source of continuing controversy in the state and the Legislature since it was adopted in 2013. But the margin of victory for the bills in each chamber fell short of what will be necessary to secure funding for the plan in the upcoming fiscal session of the Legislature, set to open April 13.

Consideration of a budget bill for the state Department of Human Services, which would include funding for the reformed private-option plan, will likely begin around April 20, lawmakers told Bloomberg BNA.

J.R. Davis, a spokesman for Hutchinson, told Bloomberg BNA April 11 that the governor was pleased with the votes on the bill, which had passed by a larger margin than expected.

“We feel good about the House, where we think we'll be fine,” he said. “As for the Senate, we need to pick up two votes there, and we'll be talking to senators, trying to explain the ramifications for the budget if we don't approve this.”

In January, Hutchinson announced the state had begun the process of seeking approval from Department of Health and Human Services for the changes contained in HB 1001/SB 1 .

Under the demonstration waiver obtained by Arkansas in 2013 under a previous governor, the state implemented the Medicaid-expansion portion of the Affordable Care Act by using Medicaid-expansion funds to purchase private insurance on the state's health insurance exchange. That waiver is scheduled to expire at the end of 2016. Hutchinson became the governor in early 2015. He replaced a Democrat, Mike Beebe.

Appropriations Bills

Under the Arkansas Constitution, appropriations bills must be passed by a three-fourths majority, which translates to 75 votes in the House and 28 in the Senate. Supporters of the bill expect to have a relatively easy time picking up the necessary votes in the House, but are less confident about the Senate, where a group of adamant opponents of the ACA and Medicaid expansion have suggested they are willing to shut down the state government, or at least a part of it, to bring Medicaid expansion to a halt.

Rep. Charlie Collins (R), a co-chair of the bipartisan Health Care Reform Task Force that spent 2015 developing the reform proposal contained in the bills, told Bloomberg BNA that throwing out the private-option plan would be tantamount to blowing a $340 million hole in the state's budget.

“The Affordable Care Act is just a euphemism for a group of 20 tax increases that the federal government imposed on the American people in the bill, along with cuts to Medicare,” he said. “And the only way that the feds will allow any of that money that Arkansas taxpayers have paid to come back to the state is through Medicaid expansion.”

Budget Hole

By ending the private option plan, a substantial portion of those covered by the plan would end up back on traditional Medicaid, where the federal government pays just 70 percent of their costs, in contrast to the 90 percent federal match under Medicaid expansion, Collins said.

And those not eligible for Medicaid would end up flooding hospital emergency rooms and loading up hospitals' balance sheets with the costs of uncompensated care, he said. “And there's very little chance that Arkansas taxpayers would be able to avoid picking the tab for the hospitals,” he said. “Just wait till some rural hospitals that are barely hanging on start to go under. Their state reps will be coming for the governor's head when that happens—the same state reps who voted down Medicaid expansion.”

Business Decision

Rep. Joe Farrer (R), a fiscal conservative who opposed the private option when it made its initial appearance before the Legislature, told Bloomberg BNA that he now supports the plan, especially with the addition of reforms that increase the program's emphasis on cost sharing and personal responsibility.

“For me, it's has become a business decision,” he said. “There are people out there who oppose this on principle, and I respect them. I used to be one of them, three years ago. But we would have a $340 million shortfall without the money from the feds, and we just added $1 billion tax breaks last year that would be eaten up if we got rid of the private option. I can't see going down that road.”

Sen. Terry Rice (R) is a member of the group in the Senate that voted against SB 1. He told Bloomberg BNA that opponents of out-of-control spending have to be willing to make sacrifices at home as well as imposing them on voters in other states.

Spending Concerns

“People always fuss at the feds for not rolling back spending,” he said. “But what does that mean if they're not willing to do it here? We may be getting a lot of money from the feds through Medicaid expansion, but it's money that's going to have to come from my children and grandchildren. And I'm not willing to put it on their backs.”

Farrer said that opposition to expansion may become difficult when the battle is joined during the fiscal session. “There are 10 in the Senate and 30 in the House who voted against it,” he said. “But are they going to be able to maintain that position when people start saying that they're holding up funds for other things, for adoption services or foster children, for old people in nursing homes and the disabled?”

“It has been a battle every year since we got Medicaid expansion, and it's going to be a battle again.”

To contact the reporter on this story: Christopher Brown in St. Louis at chrisbrown@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

A final version of HB 1001/SB 1 is not yet available on the website of the Arkansas Legislature. The full text of a draft version of the bill, which was uploaded to the governor's website, can be found at http://src.bna.com/d2f.

A summary of the bill's provisions can be found at http://src.bna.com/d2g.