The private option is not dead but it's in real jeopardy | Arkansas Blog

Wednesday, November 5, 2014

The private option is not dead but it's in real jeopardy

Posted By on Wed, Nov 5, 2014 at 4:33 PM

ASA IN THE HOLE? If the private option survives, it might need a boost from the newly elected GOP governor.
  • ASA IN THE HOLE? If the private option survives, it might need a boost from the newly elected GOP governor.
Last night's election results went about as poorly as could be imagined for proponents of the private option — the state's unique version of Medicaid expansion which uses Medicaid funds to purchase health insurance for low-income Arkansans. The issue isn't the governor's race — Republican Asa Hutchinson won as expected, but most GOP insiders believe he planned to continue the policy. But with already tight margins in the legislature, the aginners made major gains in the House and Senate. That doesn't mean the private option is dead, but the required legislative re-authorization next year just became a much, much steeper climb. The future of the policy is in major doubt. 

The first thing to understand about the private option is that its obituary has been written many times. And yet the policy has survived, passing by supermajority in the Republican-controlled Arkansas House and Senate twice. More than 200,000 Arkansans have gained coverage and the uninsurance rate in Arkansas has been cut in half. Hundreds of millions of federal dollars have already flowed into the state; hospitals report dramatic reductions in uninsured patients and tens of millions in savings on uncompensated care. The political machinations involved in rejecting billions in federal money and kicking hundreds of thousands of people off of their health insurance plans are, to say the least, complicated. Something you'd hear all the time during the legislative fights over the private option was folks in the know saying some version of — "I don't know how it will pass, but they'll find a way." That's a thin reed to hold to but, well, it turned out to be true. 

The second thing to understand about the private option, however, is that securing authorization to continue the policy is inherently dicey in a way that is unique to Arkansas. Because of a quirk in the Arkansas constitution, appropriating the funds to continue the policy demands the nearly impossible task of convincing seventy-five percent of both houses of the legislature to approve it. Insert your cliché of choice: it's hard to get three quarters of the legislature to agree to vote for mamas or apple pie, much less a highly controversial policy.

This makes Arkansas unlike any other state in the country. These big budget appropriation votes have not traditionally been contentious — Arkansas lawmakers would often approve an appropriation even if they had voted against an individual piece of legislation included within it. The politics of the private option appropriation uprooted that tradition: voting to approve the Department of Human Services budget, with the private option funding included, is considered a vote for the private option. Year after year, supporters have to find 75 House members and 28 senators who will approve the policy. All it takes to stop the private option is a rump group willing to block the entire DHS budget unless the private option is removed. There was some discussion on Twitter last night about how rare it is for state lawmakers to take a benefit away — in this case, kicking 200,000 people off their health insurance plans. But, again, Arkansas isn't like any other state. It might be the most likely of any state in the country to turn back on Medicaid expansion. We're not talking about the majority of the legislature voting to end the private option. We're talking about 9 senators out of 35, or 26 House members out of 100. 

The wave
If you take a look at the list I made last night of races to watch impacting the private option, it was a bloodbath. Every single one of the 14 races I noted went to Republicans. That actually understates the damage because the Arkansas GOP wave election impacted a number of races that most from both parties thought were relatively safe for the Dems. Incumbent Democrats Wes Wagner, Tommy Wren, John Catlett, and Tommy Thompson all went down. Nate Steel's old seat went to Republican Justin Gonzalez. Meanwhile, incumbent Democrats Camille Bennett and James Ratliff are currently leading but by very slim margins likely to go to a recount. The Republicans are going from 51 in the House to 64 and it could even go up to 66. 

Of course, the private option has never been a matter of R vs. D. The key battle has been the split within the Republican party, and in both 2013 and 2014, the majority of Republicans in both chambers voted for the private option appropriation in the end. 

Some of the Republican pickups are establishment GOP types that might vote for the private option, but a number of them are likely to become staunch members of the Hell No Caucus. Most of them campaigned explicitly on ending the private option. 

The numbers in the Senate
The private option passed with no votes to spare in the Senate last year. I've always said that the Senate was the chamber to watch and the place where the private option would face the most trouble. After all, with 100 members, the House has more places to hide and more votes to try to flip. It's easier for just nine lawmakers in the Senate to hold firm on holding up the train. 

The Senate already lost two private option votes after the Republican primaries last summer, when both Terry Rice and Scott Flippo won after campaigning on an anti-private-option platform. After last night, the private option might be four votes short in the Senate. Linda Collins-Smith is a Tea Party stalwart likely to be one of the firmest No votes in the legislature. The other pickup in the Senate is harder to read: Blake Johnson is the sort of politician that makes everyone think he's on their side. Both the Tea Party and establishment Republican wings think he's one of them. Johnson has been cagey and non-committal about how he'll vote on the private option, and even said (possibly confused about the Government Accountability Office talking point) that he would have voted for traditional Medicaid expansion. 

Johnson is probably a gettable vote. There are three other names I hear over and over as potential Yea votes. So holding the Senate is possible, but extremely difficult. There's really no margin for error, as there now six to eight senators who would never, ever vote for the private option under any circumstances. 

Bear in mind that the only way to get things over the top in the Senate last year was to come up with millions in funding for workforce training to trade for the vote of private option opponent Sen. Jane English. A scenario in which private option proponents pick up four votes assumes that they can hold English's vote as well. 

*UPDATE: Sen. Michael Lamoureux has been tapped to be Hutchinson's chief of staff. Maybe his district would elect a private-option supporter to replace him, but special elections can be wildly unpredictable. So there's at least the possibility of being five votes short, which is getting into impossible territory. The timing may be awkward as well. The seat might not be filled until well into the session. An unfilled seat is as good as a no when it comes to meeting the 75 percent threshold. 

The numbers in the House
Remember how I've said that the Senate was the chamber to watch? Well, after last night, the House actually looks like it might be an even harder slog. Among the 13 GOP pickups, the most generous and optimistic read for private option proponents is this: six who can probably be persuaded to vote for the private option if things go well, two who will lean no but are potential pickups, and five hard nos. Again, that's a rosy scenario for the private option; most of these folks said during the campaign that they opposed the policy. 

Rep. Nate Bell voted for the private option appropriation in 2014 because he believed it was the best tactical play given the constraints of the fiscal session; in exchange for his vote he got an amendment banning state funding for outreach for the private option as well as the Arkansas Health Insurance Marketplace, the exchange created by Obamacare. He was explicit in stating that his aim was to end the policy, so he should likely be counted in the No column until we hear otherwise. 

If Bell goes and the GOP pickups produce five new aginners, that puts the private option, which passed with one vote to spare last time, five votes short. 

Here's where the math becomes tricky because the House voting on the private option is so fluid and there are so many unpredictable members. I've focused on the GOP pickups, but there were also seats that the GOPs held. Some of them are term-limited Republicans who voted for the private option, and some of their replacements have expressed opposition; some are GOPs who voted no whose replacements could be possibly be Yea pickups.

Meanwhile, among returning members, there could be flips. There were certainly legislators who voted for the private option but were very wobbly supporters; there were also a few who voted against it but at various times showed an openness to supporting the policy.

In short, any attempt to count votes in the House right now is going to be messy. Lots of newcomers were at least somewhat cagey when they talked about the private option, and we already know that someone might campaign against Obamacare but then vote for the private option when push comes to shove. That said, things certainly look bleak on paper. Gaming out the various possibilities for how all of the above shakes out tends to only add more onto the No pile. Private option proponents might be starting out ten votes or more in the hole. The bigger question: are there now 26 unmoveable No votes who will do whatever it takes to stop the private option. It's a real possibility. 

Can Asa Hutcinson save the day?
"Can Asa bring in those crazies in who ran against Obama? Shoot, I don't know." That's what one Republican lawmaker said to me last night.

This is the most promising scenario for private option proponents: If the newly elected Republican Gov. Asa Hutchinson wants the private option to go forward, maybe he could lean on Republicans in the legislature to make it happen. The idea here is that Hutchinson would have more sway than a Democrat like Mike Beebe or Mike Ross (a very popular theory among pro-private option Republicans is that the key to keeping the private option was the election of Hutchinson...but of course, they would say that). 

Hutchinson, for all of his hedging, certainly sounded like a guy throughout the campaign who was triangulating and planned to move forward on the private option. And surely there are GOP legislators, both returning incumbents and newcomers, who will be willing to listen to what their party leader has to say. It may be that Hutchinson can find a way to supermajorities in ways that are not immediately clear trying to game out a vote count. 

Still, there are a number of possible holes in this theory. Yes, Hutchinson has connections with many Republican lawmakers, including those who are generally opposed to the private option or might be on the fence. But this isn't exactly like Beebe and the Democrats — Hutchinson has been gone in Washington, D.C. for years, and a lot of the folks he'll be working with campaigned on diehard, fight-to-the-death opposition to the private option. There is a well-funded and very vocal group of activists wildly opposed to the private option. There will be threats of primary challenges to any apostates. In a number of cases, the Republican newcomers were elected with big help from diehard private option opponents like Rep. Charlotte Douglas or the advocacy group Conduit for Action. Some of the GOP newbies may be more loyal to them than to Hutchinson. 

In short, there will be plenty of aginners who either won't care about pressure from Hutchinson, or face even greater pressure from the Tea Party base. 

The bigger question: Will Hutchinson actually push all of his chips into the table to get the private option passed? Remember, while he said lots of things to signal general support for the private option, he also always hedged. It was a "pilot program." It was working but he needed to wait and see, to monitor it and see if it was sustainable. My read on the campaign — which was probably the conventional wisdom — was that Hutchinson was paying a little lip service to the base but ultimately would disappoint the Tea Party. But not everyone saw it that way. I spoke with one anti-private-option activist last night who said that, while he thought that Hutchinson had been more in favor of the private option than he would have liked, he actually believed that Hutchinson moved incrementally toward being open to ending the policy.  

Hutchinson is a very careful politician. It's possible that he planned to move forward with the private option but part of the reason he was hedging was precisely in case of an outcome like last night's. He might choose to stay on the sidelines. If the opposition is overwhelming, he might decide he knows which way the wind is blowing. To be clear: everyone agrees that Hutchinson would sign the private option if it actually made it to his desk. But that's an entirely different question from whether he will work aggressively to make sure it gets to his desk.

Lamoureux, one of the most important political operators in securing the passage of the private option, will be Hutchinson's new chief of staff. (UPDATE, ADDED THESE SENTENCES FOR CLARITY: As noted above, however, Lamoureux's departure from the Senate puts one strong Yea vote suddenly in doubt, which doesn't seem like a great sign that Hutchinson — or Lamoureux — intends to push hard or prioritize getting the private option passed.)

Momentum
If history is any guide, the votes will be very fluid, and there will be more deals and flips and unpredictable turns than we could predict now. Ultimately, any talk of vote counts at this point is premature. 

Here's the hard part for private option proponents, however: legislators are, for the most part, easily spooked. The election wave was heavily in favor of the opposition to the private option. I suspect that, for example, Blake Johnson is open to voting for the private option. But if he's looking at the election of  Linda Collins-Smith and the gap in needed votes for a supermajority, is he going to be eager to join an uphill climb? There's no upside to taking a risky vote if you're worried that the whole thing is doomed. 

This same issue is magnified in the House, where proponents are going to have to work hard on a large number of pickups. Or think of it the other way: being one of a wobbly group of around 25 House members can be lonely, and some lawmakers have trouble withstanding the pressure from the majority. Being a part of a strong opposition with 40 or more colleagues is a different ballgame. 

Think about it this way: are any No votes thinking about switching to Yes after last night? Almost certainly not. Are there some Yes votes thinking about moving to No? Probably!

Circling back to Hutchinson — faced with 27 opponents in the House, he might be motivated to work hard to flip 2. But what if, say, 45 Republicans in the House vote no? There are plenty of people close to this that think that Hutchinson, for budgetary reasons, has to have the private option and he'll move mountains to make it happen. Maybe. But it's also possible that the politics are just too ugly, and he stays out of it. (UPDATE: There's a feedback loop here: if Hutchinson or Lamoureux themselves are bearish about private option passage, nervous legislators are more likely to bail.)

The game of chicken
Here's where things get really messy. The aginners have never had close to a simple majority in either the Senate or the House (though the House count is unpredictable enough that at this point, who knows). What they have is a tool: because the constitution demands a 75 percent majority for certain appropriations, they can block the DHS budget. Many observers have made the analogy to D.C. shutdown politics: private option opponents make a demand, and threaten to shut down the entire DHS budget (kids, nursing homes, the disabled, and a whole lot more) unless they get their way. The political optics of this maneuver are even wose than, say, a majority in the U.S. House angling for a shutdown in a fight with the president. In this case it's a minority — as small as 26 percent in one chamber — demanding that the majority cave to their will. Put another way, the aginners may have the votes to block the private option, but they almost certainly won't have anywhere close to the votes to pass something in its place. 

There are some hardcore opponents of the private option absolutely willing to block the DHS budget to stop the private option. But there are also some who may be uncomfortable with this particular game of chicken, or who believe it's a political loser. It's possible, as a tactical matter, that the threat from 26 percent would be enough, and the private option would simply be removed from the DHS budget. But private option proponents have never given any indication of being willing to do so. Democrats are already signalling that they'll fight like hell to keep the private option. So the threshold to stop the private option isn't just getting 26 percent who oppose the policy. It's getting 26 percent who oppose the policy enough to hold the line even if it means completely shutting down the entire DHS budget. 

And remember, this works both ways. If a rump group can block a budget to try to get rid of the private option, a rump group can also block a budget unless the private option is included. The Democrats could do this as a block, for example. This gets back to the same problem the aginners keep running into as a meddlesome minority: enough votes to block something but not enough votes to pass something. If the opposition to the private option gained enough momentum that they actually had clear legislative majorities voting against the policy, the political landscape would be more in their favor, but we're still a long ways from that. 

I'd say the incentives are currently lining up to get awfully close to a potential DHS shutdown — just what would happen then, and what the political fallout would be, is anyone's guess. 

A compromise?
The obvious question given the circumstances I've described is whether there is a potential compromise. It's frankly a little hard to see where the space for a deal is. Last year, the aginners offered the compromise of killing the private option a bit later. Not much of a compromise. Meanwhile, any significant changes would require federal approval. Something like work requirements would be a no-go for the feds. Rep. David Meeks has said he likes the private option but only for people below the poverty line. Again, partial expansion is a no-go from the feds.  I've heard talk about "copper plans" but that really has nothing to do with the private option. Some additional scrap of flexibility for the state? Perhaps. But keep in mind that the most hardcore opponents are fundamentally opposed to spending federal money to expand the safety net to low-income adults. I think it's highly likely that private option proponents will look for moderate tweaks to give cover to people that might be open to voting for the policy but campaigned against it. I also think it's highly likely that the strongest opponents of the private option will be unsatisfied with those tweaks and will say so, loudly. That is one big question for the future of the private option: Is there something that can plausibly be sold as a compromise to enough lawmakers leaning no but open to supporting a tweaked private option? We'll see. 

Side note: one area I'd expect changes is the Health Independence Accounts, which the Democrats and the aginners have both complained about.

The Dumas option 
The final wrinkle: Times columnist Ernie Dumas and others have questioned whether the supermajority is actually legally necessary. There are legal questions about whether the private option might be exempt from the supermajority requirement this year because the appropriation is exclusively federal money (the feds pick up the full tab between 2014 and 2016), and also whether the appropriation for the private option could constitutionally be passed by simple majority because it is a "necessary expense of the government." The plan in this scenario would be for the Speaker of the House or the President of the Senate to declare the appropriation passed by simple majority. This would inevitably be challenged in court and the budget would be in limbo. The Supreme Court would have to clarify a somewhat hazy rule that some believe is ripe for a challenge. They would either declare the maneuver unconstitutional, killing the private option, or they would give it the okay, potentially establishing a simple majority rule for the private option going forward. 

Many private option proponents are extremely wary of using this strategy. It would be risky, it would throw things into further chaos and uncertainty, it would reverse course on the rules of the game the legislature has been using for this very public battle, and as soon as it was made public, it would presumably spook any lawmakers considering jumping on board to make the push to 75. All of that said, some Democrats have hinted that if there is no other way forward, it should be an option on the table to keep health coverage for 200,000 Arkansans. There are certainly people looking into the legal particulars of this approach. 

So, what's going to happen?
I want to be clear here: The private option may well be gone a year from now. It is hard to imagine how the private option will be re-authorized, given the harsh math in the House and the Senate. 

It's also hard, however, to imagine just how the private option will be killed. This is likely to be a long, complicated, unpredictable, messy fight. I would say that the aginners have the edge at this point, simply because the numbers are currently on their side and the 75 percent threshold is such a powerful structural advantage for the opposition. But obituaries for the private option are premature. Right now, nobody knows. 

There is a lot of political intrigue baked into all of this, of course. Still, it's always important to remember the stakes: more than 200,000 Arkansans have health insurance coverage via the private option. They are in serious danger of having it snatched away. 

p.s. I've had informal conversations with numerous Republican and Democratic lawmakers, politicos, insiders, and activists on both sides last night and today. I'll have some additional posts with on-the-record responses this week, but at this point, the structural lay of the land is probably more important than any given lawmaker's predictions or spin.  For the record, I've heard everything from folks who think it's absolutely D.O.A. to folks who are very confident it will pass. 

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