HUTCHINSON: Putting Republican imprint on Affordable Care Act extension of health insurance to low-income people. Brian Chilson

As much as Republicans may dislike President Obama’s health care reform, it seems that Gov. Asa Hutchinson is still a pragmatist at heart when it comes to the private option — the state’s expanded Medicaid program, made possible by the Affordable Care Act. Last week, the Republican governor told a legislative task force that Arkansas should keep the private option so as to preserve the flow of federal dollars it entails.

“We can say no to Medicaid expansion,” Hutchinson acknowledged. “We have that option. Again, the result is $1.4 to $1.7 billion drained out of our Arkansas economy.”


More importantly, he said, “220,000 would have their health care coverage ended. … We know now that those covered … are our friends, our neighbors, our families. We care about them.”

With the support of a popular Republican governor, Arkansas, one of only two Southern states to have adopted the Medicaid expansion, appears likely to keep the private option. But Hutchinson also reaffirmed his opposition to the Affordable Care Act. Perhaps because Republicans must continue to insist they oppose “Obamacare,” the governor proposed seven tweaks to the program that represent an attempt to make the private option somewhat more conservative and somewhat less generous for beneficiaries.


Hutchinson said he believed private option enrollment — currently around 250,000 individuals — will decline by 30,000 people after the state Department of Human Services’ current income eligibility verification process is complete, although he was unclear about where he’s getting that estimate. The income verification process has thus far been a disaster, tossing some 50,000 people off insurance despite the fact that many remain eligible.

The legislature must approve any changes to the private option, and the first two modifications proposed by the governor would require a waiver from the federal government. Here’s a quick look at the seven points Hutchinson presented:


1. Implement mandatory employer-sponsored insurance premium assistance. Arkansans who make less than 138 percent of the federal poverty level (that’s around $16,000 for an individual or $33,000 for a family of four) are eligible for the private option, which means they are insured under private plans paid for with Medicaid dollars. Right now, that means a business like Walmart can tell its low-income employees to go to the private option for zero-premium health insurance rather than getting coverage through work.

Hutchinson wants to encourage low-income people to get employer-based insurance when it’s available. He proposed that workers whose employers offer an ACA-compliant insurance plan would no longer be eligible for the private option. In return, he said, Medicaid could partially subsidize the employer-based plan with some “premium assistance” to make it equivalent in value to a private option plan. This would amount to a shifting of cost from Medicaid to Arkansas businesses. However, because most low-income people don’t have an insurance option through their employer, its impact might be modest.

2. Implement premiums for individuals with incomes more than 100 percent of the federal poverty level. Hutchinson said individuals who make between 100 percent and 138 percent of the poverty line should pay an insurance premium. He’s floating the idea of setting premiums at 2 percent of income, as some other red states are doing.

But this runs contrary to the whole idea of getting everyone insured: Requiring even small premiums for low-income people to maintain their coverage can end up pushing people off insurance (or stop them from signing up in the first place). That can lead to gaps in coverage that threaten needed access to care. And while the premiums might seem large to the working poor, they would be infinitesimal compared with the overall Medicaid budget, accomplishing little savings. It would also entail another bureaucratic burden on DHS.


3. Work training referrals required for the unemployed or underemployed. Work training is not a bad thing, but should it be tied to insurance? This is yet another area where the effort to stuff Republican talking points into the box of Medicaid rules could end up making the program more complicated and bureaucratic, and even more expensive. However, there is some promise in this idea if the state is actually willing to invest in outreach and training. In many cases, low-income Arkansans aren’t aware of existing state resources for workforce training.

4. Eliminate non-emergency medical transportation coverage. The traditional Medicaid program guarantees non-emergency medical transport as a benefit: If a beneficiary can prove that he or she doesn’t have a way to get to needed doctor’s appointments, Medicaid will provide them with a ride. This can be particularly important in rural areas, where providers might be some distance away. A study by the Georgetown Health Policy Institute said ending this benefit would lead to “worse health outcomes, increased hospitalization, and more preventable deaths for a state’s sickest individuals.”

5. Cost savings for Medicaid. Trying to make the Medicaid program more cost-effective is a good thing — and in fact the state’s Payment Improvement Initiative, implemented during Gov. Mike Beebe’s administration, already appears to be showing promising returns on controlling Medicaid costs.

More troubling is Hutchinson’s suggestion to reduce Arkansas’s already low Medicaid reimbursement rate, which could further reduce access to doctors and care for beneficiaries. Hutchinson told the task force that it would be necessary to cut costs in the next few years, as the state begins to pick up a portion of the tab for the Medicaid expansion (the feds cover the entire cost at the moment). However, that runs counter to a recent finding by a consultant hired by the legislature, which concluded that the private option will continue to be a net positive for the state budget because of increased tax revenues created by the flow of federal dollars into the state.

6. Create a two-tiered system of private plans and traditional Medicaid. Hutchinson proposed a strange hybrid system in which the state would divide beneficiaries into two groups. Those whose incomes are a bit higher would be sent to private plans, while those at the very bottom of the income ladder would go to traditional Medicaid. This would save money, the governor suggested.

That’s true only if the traditional Medicaid program is in fact significantly cheaper than covering beneficiaries via private plans. But if one thinks the Medicaid program would be a more cost-effective way to provide coverage why not just switch the state to traditional Medicaid expansion? Why have the private option at all?

7. Strengthen program integrity. The state should make sure that people in the program are actually eligible for the private option, of course. But as the recent eligibility verification mess has shown, it is a challenge to do that while protecting eligible beneficiaries and avoiding an excessive administrative burden.

Neither Hutchinson nor DHS has offered any evidence of why the private option rolls should decrease by 30,000 individuals, as Hutchinson predicted last week. John Selig, DHS director, has admitted that many of those whose coverage has already been terminated are in fact eligible. Right now, rather than trying to make the verification system more aggressive, Hutchinson should prioritize putting safeguards in place, developing a better outreach program, and reinstating eligible beneficiaries who’ve lost their insurance.