Five keys in the Arkansas private option debate | Arkansas Blog

Wednesday, January 21, 2015

Five keys in the Arkansas private option debate

Posted By on Wed, Jan 21, 2015 at 9:54 PM

click to enlarge What will Asa do? - GOV. HUTCHINSON TWITTER
  • Gov. Hutchinson Twitter
  • What will Asa do?

Well, here we go again. The legislature is once again ready to debate the private option – the state’s unique version of Medicaid expansion, which uses funds available via the Affordable Care Act to purchase private health insurance for low-income Arkansans. Gov. Asa Hutchinson will take a long-awaited position on the policy in a speech at UAMS tomorrow morning. Then it will be up to the legislature. Health insurance for more than 200,000 Arkansans is at stake. Here are some keys to remember as the debate unfolds tomorrow and in the coming weeks. 

1. Supermajorities are hard

The simplest reason we’re about to have Round 3 of a knockdown-dragout fight over the private option isn’t really about the policy or even the politics. It’s procedural: Amendment 19 of the Arkansas Constitution, demanding that certain appropriations receive 75 percent approval from both the House and the Senate. Insert your cliché of choice — it’s hard to get three-quarters of a legislative body to approve of mamas, apple pie, etc. Much less the most controversial topic in state politics: a health care program covering 200,000 people, with billions in federal dollars at stake. And funded by Obamacare, still a dirty word in Arkansas.

Traditionally, it’s been routine to get supermajorities for an appropriation even if members disagreed with individual policies within it (the Secretary of State’s appropriation, say, didn’t get blocked by Dems last year over Voter ID). That has not been the case with the private option, where a vote for the appropriation is considered a vote for the policy. Reaching a supermajority in both houses on a contentious issue is a nearly impossible slog.

You will sometimes see national pundits doubt that a legislature will really kick 200,000 people off of their health insurance. Or mention will be made of the private option “barely passing” last year. But remember, big bipartisan majorities have voted for the private option from the get-go. The issue is whether a rump group of aginners – they just need nine senators or 26 members in the House – are willing to block the train. It doesn’t take much. This makes Arkansas unique in the nation and means (for reasons having nothing to do with the private option itself) that it has probably always been the single most likely state to actually turn back on Medicaid expansion. 

2. WWAD? And will the soft no votes follow? 

I've seen national media reports suggest that the private option is in trouble because newly elected Gov. Asa Hutchinson is an anti-Obamacare Republican. That’s an oversimplification, to say the least. Hutchinson hedged throughout the campaign. He said, well, it's "the law of the land." He said it was "working." He called it a "pilot program." During the campaign, most observers suggested that Hutchinson intended to continue the policy, albeit with adjustments and with a close eye on monitoring future costs. Conventional wisdom, for what it’s worth, remains that Hutchinson is not angling to kill the policy. He’s been very tight-lipped thus far so — we’ll see what happens tomorrow.

If the private option survives another year, Hutchinson will likely be looking to add additional conservative wrinkles (Hutchinson met with the feds to discuss options last week). The private option is made possible by a waiver of Medicaid rules, and Arkansas could ask for additional waivers. There would probably be some re-branding and re-naming. Hutchingson would probably note that the private option legislation, and the federal waiver enabling it, are already set to expire in 2016 — and that “waivers on steroids,” giving states much more flexibility, are coming after that. Continuation of the private option might also be put in the context of broader health care reforms, something Hutchinson has already hinted at. Things seem to be pointing in this direction: a new version of the private option with GOP-friendly modifications.

On the other hand, if the private option is to die, there will be talk of “transitioning” – ending the coverage expansion but coming up with a way to avoid kicking everyone off their health insurance immediately come this summer. Make no mistake: regardless of attempts to make the political pain more palatable, that would mean ending health insurance options for poor Arkansans.

There’s a third possibility too: more hedging. This has been Hutchinson’s strategy regarding the private option from the beginning. It’s possible that he’ll present a framework that could plausibly be read as opening the door either to ending the private option, or to re-authorizing it. Or punt via an end date down the road. Could Hutchinson give a speech that both expresses general opposition to the private option but also in practice paves the way for the coverage expansion to be re-upped for another year? I wouldn’t be surprised.

Hutchinson offering support for continuing some version of the policy is probably a prerequisite for it to survive. But it’s not, in and of itself, the deciding factor. More than a quarter of the House and the Senate would probably be in the “no” camp if we voted today. That’s where the movement is going to have to happen if the private option is re-authorized. Typically, we talk about the “aginners” as a block, but that can be misleading There’s the “Hell No” camp (think Sen. Bryan King), but there are also softer no votes, who oppose the private option but might be persuadable. For some, conservative tweaks to the private option may represent a sufficient policy change – or sufficient political cover. Others may feel loyalty to Hutchinson and the party, and be willing to move forward if Hutchinson puts his weight behind a plan. (One “no” vote who could be a bellwether: Sen. Jim Hendren, Hutchinson’s nephew, who accompanied him to Washington D.C. to meet with the feds about possible additional waiver options.)

3. Transforming the private option beyond “its current form” is going to take some creativity.

The quote most often noted when discussing the future of the private option came from Sen. Jonathan Dismang, the Senate President Pro Tem and one of the key Republican architects of the policy: ““The private option will not exist in its current form by the end of this session." 

Most have taken this to mean that there is an avenue to re-authorize the coverage if Republicans can put some conservative (or ostensibly conservative) twists on the program. Any changes would demand federal approval, likely in the form of additional waivers to Medicaid rules. As noted above, Hutchinson and other lawmakers and officials have already met with the feds to discuss options. 

The sweet spot to continue some version of the private option is something that will win over GOPs opposed to the private option and get federal approval. This won’t be easy.

In public comments, Hutchinson has focused on issues related to work. The feds have already told Utah that work requirements are a no-go – you can’t make Medicaid coverage dependent on having a job. However, they also said that “encouraging work is a legitimate state objective” and Utah is exploring options on work-related programs.

One possibility is that Arkansas will seek to nudge or incentivize beneficiaries toward seeking employment, work programs, job training, etc. Worth noting that work requirements are allowed for SNAP (food stamps). Many private option beneficiaries are also SNAP beneficiaries, so one could imagine work requirements for SNAP dovetailing with work encouragement/training in the private option. (Note: While this doesn’t appear to be the direction things are going, if Hutchinson actually just wants to kill the private option, he could also make poison-pill demands he know the feds won’t accept, then blame Obama.)

Whatever waivers Team Asa might come up with, they’re almost certainly not going to satisfy the “Hell No” aginners. Right-wing activists would still be screaming for repeal; meanwhile, GOP backers would be touting new waivers as conservative, state-led reform. The future of the private option would depend on which message wins over on-the-fence GOPs.

Oh, and what about the Democrats? Remember them? GOP-led “reforms” to Medicaid have often been worse for beneficiaries, and often leaned toward adding bureaucratic complexity and costs. It’s highly likely that any changes to the private option suggested by Hutchinson will make what’s left of the Dems unhappy. The danger here is that Hutchinson finds a GOP sweet spot only to lose a scattering of liberals. "We are not here to ... succumb to erroneous amendments this time that may impede the actual progression and growth of the private option as it currently stands," House Minority Leader Eddie Armstrong has said.

The private option will almost certainly need every Democrat on board to reach a supermajority, so this is worth watching. That said, we played a similar drama out in 2014, when the catch phrase was “tweaks and adjustments.” The private option ended up surviving after strengthening language around additional waivers for cost-sharing and savings accounts, as well as a ban on state-appropriated funds for outreach related to the Affordable Care Act, including the private option. Dems hated the amendments, but they all came aboard in the end. The stakes remain the same: health insurance for more than 200,000 of the state’s neediest citizens.

4. There is no alternative plan to cover the private option population.

Many of the aginners simply have a sincere objection to federal deficit spending on safety-net programs for poor, non-disabled adults. Unfortunately, they’re often unwilling to own the policy results of their philosophical position: the state’s poor losing their option for health insurance.

Prior to the private option, a shocking one in four Arkansans between the ages of 19 and 64 were without insurance. Since the enactment of the private option, the uninsurance rate in the state has been cut in half. Ending the private option (or whatever version of ACA-funded coverage expansion Hutchinson might come up with) would reverse that progress.

When this comes up, there’s often vague talk of a magic, undefined alternative. Rep. Joe Farrer explicitly promised an alternative plan which would cover all of the folks covered by the private option. It never materialized. Rep. Bob Ballinger said last year, “If we have an end to the program, what kind of ideas can be brought in? What can be done to help those people?” No new ideas arrived. Versions of these unfulfilled promises of new plans pop up again and again.

Despite the fact that the private option has been vigorously debated for two years, the aginners never, ever offer specific, affordable alternative plans to provide coverage to all these folks. The truth is that some of them just oppose the government providing publicly funded health insurance for the poor in the first place. But even if they supported a coverage expansion, there’s a simple reason no alternative has emerged. Medicaid expansion is a good deal for the state because of extremely generous matching rates from the feds (100 percent paid for by the federal government for the first three years, which then gradually falls to 90 percent by 2020 and beyond). Take away those match rates, and there’s drastically less that the state could possibly do within the confines of its budget. Lawmakers whine about the federal requirements, but offering health insurance to 200,000 low-income residents is only plausible in the state budget with the help of federal dollars. If Arkansas refuses the Obamacare money, it would be astronomically—and prohibitively—more expensive for the state to attempt to achieve even much skimpier coverage on its own. There are two choices: 1) some version of Medicaid expansion, such as the private option or the PO + more waivers or 2) ending health insurance coverage for hundreds of thousands of the state’s poorest citizens. There’s not a third choice.

5. New data will be coming in during the session.

Realistically, most lawmakers still on the fence are probably following the politics more than the policy. But there will be some key developments to watch even as the debate over the private option carries on.

Some time around the middle of the session, the state will get word about whether it’s getting money back from the insurance companies for medical loss ratio and cost-sharing reductions (see here for what that means). The per-person private option costs that were reported in 2014 were estimates, and there’s a decent chance these costs could be revised downward.

Starting soon, we’ll also get new estimates: the per-person costs for 2015. Given that premiums were surprisingly flat, the news may be relatively good. Monthly per-person costs were above the private option’s federally imposed limits in 2014 (though that could change after the adjustments mentioned above); DHS officials are predicting they’ll be well below the limits in 2015.

Also in the coming months we’ll get preliminary data about the costs of the state’s new Health Indepedence Accounts, and initial reports about how the new policy wrinkle is working in practice.

6. A simple majority?

p.s. Okay, one more. Some believe that the practice of requiring a 75 percent threshold for authorization of the private option is ripe for a legal challenge. It would be a political firestorm, but it’s at least possible that either the House or Senate could attempt to pass the appropriation with a simple majority. Then the future of the private option would be up to the courts. 

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