ARKANSAS WORKS: With federal approval in hand, state will move forward, for now, with the governor's Medicaid expansion plan. BRIAN CHILSON

Gov. Asa Hutchinson
told the press today that he had received a call from federal Health and Human Services Secretary Sylvia Burwell indicating that the feds have approved the necessary waiver to proceed with “Arkansas Works,” the governor’s plan to continue the private option Medicaid expansion.

The state’s current Medicaid expansion arrangement, known as the private option, uses Medicaid funds to purchase private health insurance for more than 300,000 low-income Arkansans. The private option was enacted under a federal waiver by the Beebe administration; that waiver expires at the end of this month. Arkansas Works will keep that coverage in place come January, but what happens next under the Trump administration and the GOP Congress is anyone’s guess.


Arkansas Works continues the private option with some limited adjustments. Beneficiaries who make more than the poverty line will have to pay small premiums (capped at 2 percent of income, which would be between $19 and $27 a month for an individual), but they will not lose coverage if they fail to do so. Unemployed beneficiaries will receive information about job training, but will not be required to participate, and having a job will not be a condition of coverage.

The other major alteration has to do with beneficiaries who are offered health insurance by a job. Under Arkansas Works, these beneficiaries will be covered by these employer-sponsored health insurance (ESI) plans, but Medicaid will chip in to pay the employee contribution and cover any benefits not covered by Medicaid. In other words, for the beneficiary, the plan will be exactly the same in terms of costs and benefits to a regular private option plan.  It’s never been entirely clear to me what the policy benefit of this approach is, but Hutchinson is very invested in tying beneficiaries to employer plans.


In practice, this wrinkle imposes costs on employers (places like Walmart), because ESI plans are partially paid for by the employer. Under the current private option, a low-income employee can sign up for a plan with the costs covered 100-percent by Medicaid. Under Arkansas Works, Medicaid would only cover the employee contribution of an ESI plan, leaving the rest of the cost to an employer.

Hutchinson had hoped to convince the federal government to chip in to defray some of those costs for employers — the final sticking point in the negotiations. The feds said that they were limited by law in terms of offering such additional incentives and based on the governor’s comments today, it sounds like they said no to this request [UPDATE: According to Talk Business, the feds will allow Medicaid to pitch in on the employer contribution for employers that newly add employer-sponsored insurance next year, but not for those that already offered it].


With the waiver granted, “Arkansas Works” will move forward, but changes are coming soon. One possibility is that the Trump administration will keep Medicaid expansion funding in place (likely via a block grant) but offer much more flexibility for states to enact the sorts of right-wing changes favored by Hutchinson, such as work requirements. Another possibility is that Trump and the GOP Congress will eliminate expansion funding altogether, in which case “Arkansas Works” will die and more than 300,000 Arkansans will lose their health insurance.