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Introducing AsaCare 

The new GOP governor proposes saving the private option, with an eye toward future reforms.

HUTCHINSON: Wants the legislature to keep the private option "as is" for two years while a legislative task force works on altering the plan.

Brian Chilson

HUTCHINSON: Wants the legislature to keep the private option "as is" for two years while a legislative task force works on altering the plan.

Gov. Asa Hutchinson finally has an official position on Arkansas's private option health care: The newly elected Republican governor is asking the legislature to fund the program for two more years. He is also requesting the formation of a legislative task force to make recommendations for an overhaul of the state's health care system in 2017 and beyond. That overhaul will likely include reform ideas popular with conservatives — such as programs to encourage employment among beneficiaries — but the task force will also aim to continue the coverage expansion to provide care for those currently eligible for the private option.

The private option — the state's unique plan using Medicaid funds available via the federal Affordable Care Act to purchase health insurance for low-income Arkansans — must be reauthorized by three-fourths of both the state House and Senate. Bipartisan supermajorities cleared that difficult 75 percent threshold in 2013 and again in 2014, but with just a handful of votes to spare. The issue split the state Republican Party: Several GOP lawmakers acted as key architects of what they dubbed an innovative, conservative form of Medicaid expansion, while Tea Party diehards viewed the private option as surrendering to Obamacare. The policy appeared to be in real trouble after the November elections, with Republicans dramatically increasing their majority, including a wave of new lawmakers who campaigned explicitly against the private option.

Hutchinson's announcement, after months of hedging on the issue, throughout the campaign and after the election, came at a speech last Thursday at the University of Arkansas for Medical Sciences. "[I]t is time to close this chapter and to start a new one," he said. Hutchinson said that the phrase "private option" had become "politically toxic," and he wanted to "broaden the debate to the larger Medicaid budget." He said that concerns about future costs were wise but also acknowledged the policy's successes, helping cut the state's uninsured rate in half and putting hospitals in the state on more solid financial footing. "Those two benefits are facts that we cannot deny, should not deny, and should rejoice in," he said.

The speech represents good news for more than 200,000 Arkansans who have gained health insurance via the expansion, which covers adults 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), and hospitals who have reported dramatic savings in payments for uncompensated care since the policy went into effect — around $80 million in the first half of 2014 alone. Because the private option is fully federally funded through 2016 (the state will have to start chipping in 5 percent in 2017, gradually rising to 10 percent in 2020 and beyond), it has also meant billions in federal dollars flowing into Arkansas and nearly $90 million in savings to the state budget in 2015.

While Hutchinson's support was probably a prerequisite to the survival of the private option, he still has to convince enough right-wing legislators to come aboard to get his plan over the supermajority hump. Another protracted drama in the General Assembly could be in store.

Rep. Kelley Linck (R-Yellville), chair of the House Public Health committee, said he believed the necessary votes would be there in his caucus to move forward with Hutchinson's plan. "I believe they will be," he said. "I don't think anybody's going to love this; I don't think anybody's going to hate it. If all sides are not happy, then we'll probably have a consensus."

At least a few legislators previously in opposition to the private option have been positive about Hutchinson's proposal. "I'm going to support it," said Rep. Joe Farrer (R-Austin), who voted against the private option in 2013 and 2014 and has been one of the program's most outspoken critics. "I think it's the right thing to do." He said he believed continuance of the private option would pass. "I don't think you're going to have the fight over it that we had last time."

Others remain firmly in the "Hell, no" caucus. Sen. Bryan King (R-Green Forest) said Hutchinson's proposal was just "kicking the can down the road."

"I'm opposed to keeping the program going," King said. "I've always been opposed to the private option. We didn't know what it was going to do when it was passed. It was just a bunch of promises and it's all failed, except for providing health care to a certain segment of the population."

King said he wasn't sure how things would play out in the General Assembly, but expressed concerns that fellow Republicans would follow the new governor's lead. If the private option stays in place for another two years, he predicted that the coverage expansion to Arkansans would continue after that, even if it had another name. "I've got a better chance of starting for the Kansas City Chiefs in 2017 than anybody [thinking that] Obamacare expansion's not going to come back," he said. King is not alone: A number of lawmakers who campaigned explicitly against the private option said they were unhappy with Hutchinson's approach. Earlier this week, Sen. Linda Collins-Smith (R-Pocohontas) and Rep. Donnie Copeland (R-Sherwood) filed bills to immediately repeal the private option.

The afternoon after Hutchinson's speech, nephew Sen. Jim Hendren (R-Gravette) — previously a diehard opponent of continuing the private option — filed a bill to enact the governor's proposal. The bill would create a task force made up of 16 legislators, as well as new state Surgeon General Greg Bledsoe as a nonvoting member. (Bledsoe is the son of Sen. Cecile Bledsoe, R-Rogers, an outspoken opponent of the private option who sounded positive notes about the governor's proposal, stating after his speech, "I think people are excited.")

One surprise about Hutchinson's plan: Most observers expected that he would demand some immediate wrinkles to the policy that could be sold as "conservative reforms." Hutchinson, along with Linck, Hendren and Greg Bledsoe, met with federal officials from the Department of Health and Human Services (HHS) the week before Hutchinson's speech to discuss whether the feds would give the state additional flexibility to tailor its own coverage expansion program. The feds have drawn a line in the sand and are not allowing states to impose work requirements as a condition of Medicaid coverage, but HHS has been open to programs that would encourage or incentivize work or work-training programs. Many predicted that Hutchinson would pursue something related to work training, or perhaps a wellness program, as other red states have negotiated in Medicaid deals.

Instead, Hutchinson said that he was recommending that the legislature fund the private option "as is" through the end of 2016. He made note of a letter from HHS Secretary Sylvia Burwell, which expressed general openness to working with the state going forward. However, Hutchinson said, any major changes to the program should come out of the broader overhaul of the Medicaid program that his task force would aim to implement in 2017, rather than tweaks to the existing program. In fact, the only changes in Hendren's bill actually remove policy wrinkles pushed by GOP backers of the private option: A program to begin imposing cost-sharing and savings accounts on beneficiaries below the poverty line would be nixed, and a future plan to move kids and very poor parents from the traditional Medicaid program to the private option would also be scrapped. According to state officials, the purpose of subtracting these policy twists was to reduce short-term costs and to put the focus on the task force recommendations and long-term reforms, rather than implementing incremental changes now.

What might those task force recommendations look like? Hutchinson said the purpose of the task force was to find "an alternative health coverage model" that includes a "compassionate and reasonable cost-effective response for care of those currently on the private option." In short, Hutchinson is signaling that AsaCare (or whatever it's called by 2017) will aim to offer coverage to the category of low-income Arkansans who gained insurance via the expansion, but in the context of a Republican-friendly rethinking of the state's health care system as a whole. For now, that's a picture short on details, though Hutchinson mentioned lots of GOP talking points — some feasible, some probably not: block grants, encouraging employment, wellness programs and "market-driven" solutions.

The start date of task force recommendations was no accident. Beginning in 2017, Obamacare makes a new set of waivers available that could potentially give the state much more flexibility in terms of crafting a plan both for the Medicaid program as well as making changes to the entire Health Insurance Marketplace, the regulated health insurance exchange in the state created through Obamacare. There will also be a new presidential administration in place, so the negotiating terms may evolve. (Worth noting, too, is that 2017 is the first year that Arkansas has to start contributing a small share of the cost of expansion, so Hutchinson is merely proposing that the state continue the private option while the feds are footing the entire bill.)

While divisions remain within the GOP, Democrats were pleased with last week's developments. Rep. Joe Jett (D-Success) said lawmakers in his caucus were "pleasantly surprised."

"I think he's taking a real pragmatic approach," said Rep. Stephen Magie (D-Conway), an ophthalmologist. "He understands the needs of Arkansans."

Just what AsaCare might look like in 2017 is anyone's guess, but for now eyes will turn to the legislature. The immediate future of the private option will come down to wrangling enough votes for yet another supermajority, with billions in federal money, the future financial health of the state's hospitals, and health insurance for 200,000 Arkansans at stake.

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