News: CJ Exclusives

Arkansas’ Republican option: A harder Medicaid pill to swallow 

Republican Gov. Asa Hutchinson persuaded Arkansas legislators not to slash an additional year of Medicaid expansion even though a court struck down the state's work requirement. (Photo courtesy of the Office of the Governor of Arkansas)
Republican Gov. Asa Hutchinson persuaded Arkansas legislators not to slash an additional year of Medicaid expansion even though a court struck down the state's work requirement. (Photo courtesy of the Office of the Governor of Arkansas)

[Editor’s note: This story is part of “Cracks and Fissures,” a Carolina Journal series of articles about the implications for North Carolinians of the coverage gap between people eligible for Medicaid and those with private health insurance. Gov. Roy Cooper is pushing expansion of Medicaid to cover the working poor but the GOP legislative majority says expansion would exacerbate flaws in the system and lead to spiraling debt.]

The U.S. Supreme Court in 2012 made it optional for states to expand Medicaid, and several immediately signed on. A few resisted, including North Carolina, and have yet to pass an expansion bill. Still others opted for a more Republican-friendly expansion, encouraging competition among health insurers and personal responsibility among enrollees. 

Arkansas was the first state to request expansion via one such Medicaid hybrid. Through the so-called “Private Option,” Arkansas uses Medicaid funding to place eligible adults those whose incomes fall at or below 138% of the federal poverty level, or $17,000 for a single adult in private health plans, instead of being lumped together with the rest of the Medicaid rolls. Later on, the Republican-dominated legislature added a work requirement. 

But even with conservative tweaks, Medicaid expansion has rocked the state government to perhaps an even greater degree than traditional expansion would have.  

The Private Option was intended to increase competition in the Obamacare marketplace, said Joe Thompson, director of the Arkansas Center for Health Improvement and one of the policy’s crafters. Since the program’s inception, he said, Arkansas has increased the number of health insurance carriers, avoided rural hospital closures (except for one a couple of months ago), and cut the percentage of uninsured Arkansans by about half — from 25% to 12%. 

But the program isn’t without its flaws. 

An ACHI report shows the program costs double what traditional Medicaid expansion would have. That amounts to a grand total of $7 billion in Medicaid expenditures during the state’s 2017 fiscal year. Arkansas also vastly underestimated the number of expansion enrollees it would attract. The state said it wouldn’t enroll more than 215,000, but ended up with 324,000 in the first 18 months.  

The incentives are also bad, says Nic Horton, research director at the Foundation for Government Accountability. The expansion population the group earning somewhere between 100% and 138% of the federal poverty level are mostly able-bodied adults. They’re the ones with private insurance plans — those granting higher reimbursement rates to doctors and more likely to solicit actual treatment. The more needy population people with severe disabilities, seniors, or low-income kids — have regular Medicaid plans that often don’t allow them the same access. 

“If you’re on regular Medicaid in Arkansas, you can have a hard time finding a doctor to see you, because a lot of them don’t accept Medicaid because it reimburses so poorly,” Horton said. 

On the upside, the work requirement Arkansas passed in 2017 might not deserve nearly the amount of media flak it has received. Contrary to reports, the 18,000 Arkansans who lost their coverage weren’t all staring blankly at computer screens, confused about how to log their hours. Eighty-seven percent, in fact, simply failed to meet the work requirement, Arkansas State Welfare Agency records show. 

Then, in a dramatic twist, a federal judge struck down the work provision in March, and the Trump administration is appealing the case. The judge’s decision dealt such a blow to Arkansas Republicans, who control the state’s legislature, that they almost slashed an additional year of Medicaid expansion. Republican Gov. Asa Hutchinson persuaded them otherwise, in hopes of reviving the work requirement after an appeal. 

“I voted against it the first time because I wanted more time and discussion,” Arkansas Rep. Julie Mayberry, R-Hensley, told Carolina Journal. “But then the governor and several others spoke to us. We’re hoping that by voting for it, we’ll keep the work requirements in there.” 

Nevertheless, even personal responsibility initiatives like work requirements still aren’t enough to stabilize the state’s budget. N.C. Republicans have grappled with a similar dilemma this session.  

“I think North Carolina should be proud they haven’t given in to this,” Horton said. “It would be a mistake to go back on that now.”