Arkansas political observers aren't betting the farm on whether the Republican-controlled Legislature will approve Gov. Asa Hutchinson's plan for renewing and modifying the state's widely acclaimed Medicaid expansion to low-income adults.
Hutchinson, a Republican, has called lawmakers to Little Rock for a special session starting Wednesday to vote on his plan, dubbed Arkansas Works, a revised version of his Democratic predecessor's so-called private option version of expansion that helped cut the state's uninsured rate by more than half. About 225,000 people have received coverage under the existing program.
That waiver program approved by the CMS expires in December. The new plan has to win support from 75% of both the state House and Senate, and it faces resistance from the most conservative Republicans and from conservative advocacy groups. Failure to renew the Arkansas Medicaid expansion would be a serious political setback for the Obama administration, which is pressing for expansion in the 19 states that have not approved it so far.
Failure to pass the plan also would have serious budget ramifications for the state, Hutchinson and other Republican lawmakers say. They warn the budget hole left by the loss of federal Medicaid expansion dollars could grow as high as $350 million in the next three to five years. Hospitals warn that they would be seriously hurt financially as well.
“I think it's a possibility that coverage won't continue,” said Senate President Pro Tem Jonathan Dismang, a Republican who was one of the architects of the original private-option Medicaid expansion, under which the state covered adults with incomes up to 138% of the federal poverty level through private health plans sold on the federal insurance exchange.
House Republicans made similar predictions, noting that there's ideological opposition to anything related to the Affordable Care Act. In addition, opponents argue that continuing the program will increase the federal deficit and place a greater burden on the state budget.
Under Hutchinson's proposed plan, Arkansans with incomes between 100% and 138% of the federal poverty level would pay up to 2% of their income in monthly premiums. The state already had authority under a waiver approved by the CMS to impose premiums.
Arkansas became the first state in the nation to receive approval from the federal government for a customized approach to Medicaid expansion via a Section 1115 demonstration waiver spearheaded by Democratic Gov. Mike Beebe and approved in September 2013. Five other states with conservative leadership have since applied for and received similar Medicaid waivers for expansion.
Arkansas originally decided not to impose premiums on beneficiaries with incomes under the poverty level. And it never collected premiums from people with incomes from 100% to 138% of poverty. That would change under Arkansas Works.
A new provision under Hutchinson's proposal would require employed beneficiaries 21 and older to enroll in their employer's health plan if the employer agrees to participate, with the program paying for premiums and co-pays. Another new provision would send unemployed beneficiaries for job training and job search programs.
Some Democratic lawmakers want some minor tweaks before they support the governor's plan, said Rep. Michael Gray, a Democrat.
One change they're seeking is including a mechanism to ensure continuity of care if employed beneficiaries lose their jobs. Another is to provide work search resources to everyone in the program so employed beneficiaries can get help in finding better jobs, Gray said.
If the governor's plan is not approved, most of the expansion population would lose coverage. But as many as 40,000 people would need to be put back in regular Medicaid at a significant cost to the state, since that program only receives a 30% federal match rate, versus the 100% match the state receives now, said Rep. Joe Farrer, a Republican. The federal match will drop to 90% by 2020.
Additional budget pressures would emerge due to the state once again having to pick up birthing costs for low-income mothers and to increased use of hospital emergency departments as a primary form of care.
“I was against the private option three years ago, I thought it was bad for our state,” Farrer said. “Now that we have it, we can't afford to get rid of it.”
“The choices are to fund this legislation or decimate our budget,” said Rep. Charlie Collins, the Republican chairman of the House Insurance and Commerce Committee. “When it comes down to the actual vote, people are going to have to come to grips with the fact that these are the choices that exist in the real world, as opposed to ones in a fantasy world.”
Also during the special session, Hutchinson expects lawmakers to vote on a proposal to place low-income developmentally disabled and mentally ill individuals into Medicaid managed-care plans. Hutchinson has said that would save the state nearly $1.5 billion over the next five years.
That idea is getting pushback from both Republican and Democratic lawmakers who warn that managed-care plans will be more focused on their bottom lines than delivering needed care to these vulnerable patients.