Arkansas' Medicaid expansion may hinge on election results

Harmony Health Clinic, a free clinic that serves only uninsured people with incomes below 200% of the federal poverty level, has seen a sharp drop in its patient population since Arkansas implemented its Medicaid expansion this year.

Last year, Harmony's clientele had swelled to 2,000 patients. Now, following the expansion of Medicaid to adults earning up to 138% of the federal poverty level, it expects to have about 500 uninsured patients from here on out. “We'll still be here,” said Eddie Pannell, Harmony's executive director. “We have people come in the door every day asking, 'Can I come see the doctor?' ”

That reduction is a sign of Arkansas' success in expanding health coverage under the Patient Protection and Affordable Care Act. The state has seen the steepest drop in the rate of uninsured in the country—from 22.5% to 12.4%, according to Gallup. Roughly 250,000 residents have gained coverage through the federal insurance exchange, mostly due to the innovative Medicaid expansion negotiated by Democratic Gov. Mike Beebe with the Republican-controlled Legislature.

David Deere, executive director of Partners for Inclusive Communities, a Little Rock-based not-for-profit that has worked on enrollment efforts, said he was “amazed” at the state's success. “A year ago, if you had told me we would have that kind of success, I would have asked what you've been smoking.”

The increased coverage has helped Arkansas' hospital finances. During the first six months of 2014, the number of uninsured hospital patients decreased by 46.5%, reducing charity care by $69.2 million, according to an Arkansas Hospital Association study.

At the University of Arkansas for Medical Sciences, more than 13% of patients showing up at the hospital at the end of last year were uninsured, said CEO Roxane Townsend. In January, that number dipped to 11%. For the past five months, it has been below 4%. For the fiscal year that ended June 30, the hospital had a $1.5 million operating deficit. So far this year, it's operating in the black.

But the expanded Medicaid program's survival is uncertain, possibly hinging on the outcome of Tuesday's elections for governor and the state Legislature. The GOP candidate, Asa Hutchinson, has been coy about whether he will support extension next year, and some GOP candidates have vowed to end it. The extension needs the votes of three-fourths of the state House and Senate, and it barely squeaked through last spring.

Arkansas pioneered the private-option expansion model in which the state Medicaid program enrolls beneficiaries in private health plans through the exchange, with the federal government paying all costs through 2016 and 90% after that. Beebe and others argued that using private exchange plans was a better way to expand Medicaid coverage because people could keep their same plan and providers if they left Medicaid.

That alternative to government-run Medicaid has become a template for other Republican governors and lawmakers seeking a more market-oriented approach and who don't want to be seen as embracing Obamacare. “One state had to be bold enough to step out there and present another alternative,” said state Sen. David Sanders, one of the Republican architects of the private-option approach.

But holding together a 75% coalition of supporters is dicey. Another key Republican architect of the Medicaid expansion, state Rep. John Burris, was defeated in a GOP primary largely because of his support for the program. “It's an uphill battle,” Sanders said. “We knew that it would always be tough.”

Under conservative pressure, Beebe submitted a request to the CMS to allow the state to require Medicaid beneficiaries, including those under the poverty level, to make monthly contributions to health savings accounts. Experts warn that could discourage low-income people from enrolling. The CMS previously has not approved state proposals to require contributions from those under the poverty level. It's unclear whether conservative Arkansas lawmakers would support the program's extension without that feature.

Another challenge is that the Legislature has prohibited state agencies from spending money on enrollment efforts. Harmony had used a federal grant to hire five enrollment workers. That money has run out, but the clinic has scrounged up enough money to keep two outreach workers on the payroll.

Supporters of expanded coverage have started not-for-profit Arkansans for Coverage to collect private donations to fund enrollment outreach. That group has raised roughly $500,000 through foundation grants. In addition, two organizations have received federal navigator grants totaling more than $900,000. Deere, whose organization received one of those navigator grants, said enrollment prospects will be “bleak” in counties lacking enrollment workers.

The University of Arkansas' Townsend worries what would happen if the state scraps its successful Medicaid expansion. “We would be in a very difficult financial position,” she said.

Follow Paul Demko on Twitter: @MHpdemko