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Tuesday, February 4, 2014

Conservative advocacy groups peddle legal theory about private option

Posted By on Tue, Feb 4, 2014 at 3:00 PM

Last month, an anti-private-option advocacy group, Conduit for Action, was a last-minute addition to the agenda at a Public Health meeting, where they presented an argument that there were aspects of the federal waiver allowing the private option that conflict with the underlying Arkansas private option law.

Officials from the Department of Human Services, which had not been alerted ahead of time, testified that CfA had simply misunderstood the relevant language in the waiver. Public Health is meeting this afternoon to re-hash things. I'm out of town but Benji Hardy is likely to be reporting from his Legislative Digest blog. In the mean time, here's some background and thoughts: 


You can read the full memo articulating CfA’s argument here. Here’s the gist: they believe that there is a conflict  in the process for terminating the private-option program between the special terms and conditions in the federally approved 1115 Medicaid waiver and the Healthcare Independence Act (the state law). CfA argued that this could potentially lead to the feds subjecting the state to penalties if Arkansas ends the private option program.

If you don’t care about getting in to the legal weeds, feel free to skip the next two paragraphs! The state law includes language regarding a special trigger which would terminate the program after 120 days if the feds fail to maintain the expansion match rates promised by the Affordable Care Act. It also includes language suggesting that the state can terminate the program simply because the legislature declines to appropriate the funds (a coin flip heading in to this year's fiscal session). CfA argues that this conflicts with the waiver — which includes language in the special terms and conditions regarding Demonstration Phaseout (if you’re interested, see Section III, #9) requiring six months notice to CMS, plus one month public-comment period, before suspending or terminating the demonstration. (*CfA also separately argues that there's a problem with the law including language that "the program is not an entitlement program" but that just seems to be pure political trolling.)

CfA argues that the state could be in hot water with the feds if the private option is cut off without following the CMS phaseout protocol (they don’t really describe what this hot water might entail). However, a plain reading of the language in the waiver terms and conditions appears to suggest that the terms regarding suspending/terminating apply to the waiver (pursuing "private option" demonstration as opposed to traditional Medicaid) rather than the expansion itself. The waiver doesn't make any claims about actually funding Medicaid expansion. In other words, if Arkansas declines to appropriate the funds and halts the expansion, the terms and conditions regarding termination of the waiver would be irrelevant. The waiver itself would be void.

Now…I’m not a lawyer! But I did consult with several experts on health law and Medicaid waivers (including Tim Jost, Nicholas Bagley and Joan Alker) and that distinction — the rules apply to ending the waiver of Medicaid rules, not ending the expansion — appears to be a straightforward reading of the boilerplate language in the waiver. That's more or less the position that DHS counsel takes. Of course, the nature of technical legal questions is that clever lawyers can come up with all sorts of creative arguments. So maybe CfA (along with experts from conservative advocacy groups Heritage Foundation and Foundation for Government Accountability who are flying in for today’s meeting) can make a plausible argument that there is somehow a threat to Arkansas if the state simply defunds, despite the state law’s explicit mechanisms for ending the program.

But here's the thing. Why would the feds try to drop the hammer and pick a complicated legal fight with the state of Arkansas over a few months of transition out of the private option? Remember, the Department of Health and Human Services has 20+ states they are still trying to convince to expand Medicaid. They are desperate to reel in the big fish — Texas and Florida. That means they have every motivation to appear as flexible and inviting as possible. The notion that they are going to wage a major battle with Arkansas to try and force them to phase out over six months instead of four — it just doesn't make sense. 

Finally — let's assume that the feds have a legal case against Arkansas for not following the waiver phaseout terms (I'm skeptical) and let's also assume that the feds would actually pick this fight (chances seem infinitesimally small)...we're still talking about a difference of two or three months tops (if Arkansas defunds the private option in March, say, the program wouldn't end until the end of the fiscal year in any case). This is, in short, a silly sideshow. 

Someone like me who supports the private option might almost hesitate to mention how silly this whole thing is. After all, if there was a major legal or financial obstacle to defunding the private option, that might discourage legislators from defunding the private option! This isn’t just a hypothetical—Rep. David Meeks told me he was hesitant to pursue a “pure defund” strategy because he was worried about the issues raised by CfA. The whole thing is a bit odd. A lot of effort is being put in to pushing the notion that there is a great risk to defunding by the very same folks pushing defunding.

What we’re actually seeing, I suspect, is just the incredible appetite for bad news about the private option among opponents of the policy. You will rarely see a giddier group of grownups than the anti-private option legislators who heard CfA testify last month. The possibility that something was amiss—or even better, that they were LIED TO — is irresistible. Rep. Justin Harris could barely contain himself. “This is HUGE against the PO,” he tweeted. Anything that could be construed as a problem for the policy (never mind the impact on Arkansans) is like candy.

The CfA folks, bummed that their presentation was mostly ignored by the media last month, wrote "we think it’s one of the biggest Arkansas stories of the last 12 months." That’s a bit of a bold statement given that the private option itself came about in the last twelve months. But it makes sense to construe this minor detour as “huge” if one’s main interest is righteous anger at the pitching of the private option last spring. So, there you go. Today’s meeting (held despite the weather, presumably because Heritage and FGA folks are in town) might well be a waste of time, but it will fire up those looking to be fired up. That appears to be the main purpose of legislative meetings on health care anyways.

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