Arkansas Medicaid 'savings' will produce some losers | Arkansas Blog

Thursday, April 27, 2017

Arkansas Medicaid 'savings' will produce some losers

Posted By on Thu, Apr 27, 2017 at 7:40 AM

click to enlarge CINDY GILLESPIE: The DHS director hopes few will lose health insurance under planned state changes. - BRIAN CHILSON
  • CINDY GILLESPIE: The DHS director hopes few will lose health insurance under planned state changes.

Human Services Director Cindy Gillespie
talked to reporters yesterday about Gov. Asa Hutchinson's plans to cut 60,000 or so from the expanded health care coverage for low-income people provided under Obamacare.

David Ramsey had outlined earlier this week the main thrusts — a work requirement for participants (easy to say, trickier to do) and a drastic cut in those eligible, from those with income of 138 percent of the federal poverty level or less to 100 percent.

These ideas will be approved readily in a pro forma special legislative session next week.

The big takeaways yesterday:

* If all the projections work out (and these are projections, not guarantees), the state will save $93 million over five years, or roughly $18 million a year. Not chump change. But the Arkansas Medicaid budget is about $4.1 billion a year, with approximately $1.2 billion paid by the state. A savings of $18 million on that is about a 1 percent trim. And it will have some economic downsides in lost reimbursements to people who provide the health coverage and services.

* Some 60,000 will be moved off the Obamacare Expansion/Private Option'Arkansas Works rolls. But not to worry, Gillespie said: They'll move into the federally subsidized health insurance marketplace. From the Arkansas News coverage of Gillespie:

Gillespie said the state could achieve the savings without a significant increase in the state’s uninsured population.

“Our goals is not for everyone to lose health insurance,” she said.

Laudable goal, but improbable. Only some 25 percent of people now covered are now paying the $13 monthly premiums for their otherwise free coverage. That's because there's no enforcement mechanism for non-payment, Gillespie says. But will people making $12,000 a year — who can't now afford to pay $13 a month — be able to afford the higher cost of the health marketplace insurance coverage which might not be such good coverage? Seems questionable. Also: How much higher that coverage costs is a matter yet to be determined by Congress, where many Republicans are anxious to end federal subsidies altogether. Private insurers are already nervous about participation in the marketplace.

Here's what I believe to be a safe prediction: Fewer Arkansas people will have health insurance once this changeover is fully in place (it will roll out monthly as those covered come up for renewal and eligibility is checked.) How many? In time, we'll know. But it's also true the losers will be from the little-represented, typically forgotten numbers of the working poor. The political risks from gradual decimation of their coverage are slight.

One final point that true fiscal conservatives would make: A savings of money for Arkansas does not necessarily mean a savings for taxpayers as a whole. If, as Gillespie hopes, the federally subsidized marketplace picks up the slack for all those tossed off state coverage, that's just a transfer of  financial costs from the state to the federal government. OK by me, but it is not a reduction in the size of government.

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