Gov. Asa Hutchinson hammering out final details with feds on continuation of private option | Arkansas Blog

Tuesday, December 6, 2016

Gov. Asa Hutchinson hammering out final details with feds on continuation of private option

Posted By on Tue, Dec 6, 2016 at 9:35 AM

click to enlarge HAGGLING: Hutchinson is hoping to squeeze out a little more federal money to enact his Arkansas Works plan.
  • HAGGLING: Hutchinson is hoping to squeeze out a little more federal money to enact his Arkansas Works plan.
Gov. Asa Hutchinson is hammering out the final details on an agreement with the Obama administration to enact "Arkansas Works," the governor's plan to continue the state's private option Medicaid expansion with a few modifications. The D-G reports this morning on the progress of the negotiations, down to a final sticking point over  federally funded incentives for Arkansas employers that offer health care plans for Medicaid beneficiaries.

The clock is ticking — the state's current Medicaid expansion agreement, enacted under the Beebe administration, expires at the end of this month. Of course, even when an agreement is reached, it's likely to be temporary, with Donald Trump moving into the Oval Office next month. Once the federal government is under total Republican control, one of two things is going to happen: Either House Speaker Paul Ryan will get his way and eliminate Medicaid expansion altogether, in which case Arkansas Works — and coverage for 300,000 Arkansans — will die. Or the expansion funding will stay in place (likely block-granted) but the Trump administration will allow much more in the way of right-wing changes to the program that Hutchinson wants, such as work requirements and kicking beneficiaries out of the program if they don't make required payments.

In the mean time, Hutchinson needs to get approval for "Arkansas Works," set to go into effect on January 1. Arkansas Works makes some limited adjustments to the private option, inspired by Republican talking points. Beneficiaries who make more than the poverty line will have to pay small premiums (capped at 2 percent of income, which would be between $19 and $27 a month for an individual), but they will not lose coverage if they fail to do so. Unemployed beneficiaries will receive information about job training, but will not be required to participate, and having a job will not be a condition of coverage. The feds are on board with these alterations.

The last hurdle has to do with the governor's plan to encourage more Medicaid beneficiaries to be covered by employer-sponsored insurance plans rather than the private option Medicaid plans. It's a convoluted scheme that would likely impose additional costs on employers, and Hutchinson wants the feds to defray some of those costs.

Here's the convoluted scheme (the feds are on board with this part): Right now, under the private option, anyone who makes less than 138 percent of federal poverty level (that's around $16,000 for an individual or $33,500 for a family of four) is eligible for Medicaid, which purchases private health insurance plans for them on the Arkansas Health Insurance Marketplace. Hutchinson wants low-income folks who get offered health insurance by a job (ESI—employer-sponsored insurance) to be covered by that ESI plan instead of a private option plan. But ESI plans typically make employees pay for part of the cost of the plan, and they might not cover all of Medicaid's benefits. So under Arkansas Works, the Medicaid program would make up the difference — it would pay for the employee's contribution and any benefits not covered by the company plan.

Got all that? After all that rigmarole, the end result is that the employee would be on an employer-sponsored plan, but it would look exactly like Medicaid in terms of costs and benefits for the beneficiary. I don't see a policy benefit to this scheme, but Hutchinson seems to like the concept of beneficiaries being tied to employer-based health insurance plans, so here we are. The net result, however, is that employers (like, say, Walmart) would end up with additional costs. Remember, an ESI plan is typically partially paid for by the employer. Under the current private option, a low-income employee can sign up for a plan with the costs covered 100-percent by Medicaid. Under Arkansas Works, Medicaid would only cover the employee contribution of an ESI plan, leaving the rest of the cost to an employer.

In this last round of haggling, Hutchinson is asking that, in addition to paying all of the employee contribution, Medicaid also pay 75 percent of the costs of the employer contribution. The feds are saying they don't have the legal authority to do that, though it's possible they could provide some incentives for employers who don't currently offer ESI to do so. That's the impasse.

My guess is that this is a dead end and that Arkansas Works will proceed with the convoluted ESI approach described above, but only limited incentives for employers. Hutchinson will be looking ahead to much more aggressive changes once Trump gets in the White House in any case.

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