A health-care bill that recently cleared the U.S. House with the support of all four Arkansas congressmen is at odds with Gov. Asa Hutchinson’s plans for the state’s Medicaid expansion program, but the governor says he is hopeful the Senate’s version will be better.
“Obviously I’m concerned about the House bill, that there is a cost shift to the states,” Hutchinson told reporters Wednesday at the state Capitol. “So I’m anxious for the Senate to take a fresh look at this. I’m sure that they’ll make adjustments to it.”
The House approved the American Health Care Act on May 4, the same day Hutchinson signed legislation that would make changes to the state’s Medicaid expansion program, pending federal approval. But Arkansas’ program, formerly known as the private option and now known as Arkansas Works, would be significantly undermined by the AHCA in its present form.
What the bill would do
Arkansas created its unique program in 2013 as an alternative to the expansion of state Medicaid rolls that the federal Affordable Care Act proposed. The state has reduced its uninsured population by more than half by using federal funding provided under the ACA to provide private health insurance to people earning up to 138 percent of the federal poverty level.
The federal government initially paid the entire cost of the program, but this year the state became responsible for 5 percent of the cost, and the state’s share is set to increase gradually to 10 percent in 2020 — a much better rate for the state than the 30 percent it pays for other Medicaid programs.
The AHCA would end the 90/10 match rate for Medicaid expansion for new participants starting in 2020, so Arkansas would have to pay 30 percent of the cost for new participants or stop admitting new people to the program at that point.
Under the AHCA, the federal government would continue to provide the 90/10 match rate for people who enrolled in Medicaid expansion before 2020, but only if they do not experience a gap in coverage of more than a month.
If a person’s income rises above the maximum level for eligibility for a month or more, the person would be disqualified and could not requalify if his or her income were to decline — and income fluctuations are common for Medicaid recipients. Therefore, the population covered by the 90/10 match rate would not only stop growing but could be expected to decline quickly.
Hutchinson wants to add a work requirement to Arkansas Works and lower the maximum income level for eligibility to 100 percent of the federal poverty level. The latter change is estimated to eliminate about 60,000 people from the program, which serves more than 300,000 Arkansans, but Hutchinson has said those people will be able to obtain coverage through the insurance exchange with federal subsidies that match the state and federal aid they receive now.
That would not be true if the AHCA were to become law in its current form, however.
Currently, people whose income is between 100 percent and 400 percent of the federal poverty level qualify for subsidies, or refundable tax credits, allowing them to buy coverage through the insurance exchange and pay no more than 2 percent of their income.
The AHCA would replace those subsidies with smaller ones based largely on age and would eliminate the 2 percent rule. It also would allow insurance companies to charge older, sicker customers up to five times what they charge younger, healthier customers, but the subsidies for older people would only be twice what younger people receive.
Subsidies would not vary according to local insurance prices, as they do under the Affordable Care Act, so people in rural areas could have to pay more than people in urban areas where health care is less costly to provide.
The AHCA also would do away with cost-sharing reductions that help people earning less than about $30,000 a year pay their out-of-pocket expenses.
The bill also would revamp traditional Medicaid and shift about 25 percent of its costs to the states over 10 years.
The measure would allow states to add work requirements to Medicaid, which is in line with Hutchinson’s goals for Arkansas Works.
Just the first step
Hutchinson said that despite his concerns about the bill, its passage in the House was necessary.
“They needed to pass it to turn the ball over to the Senate to take it from there. The Senate has indicated that they’re going to write their own bill, and so the signal is that while the House took necessary action, that it’s a beginning point and not an ending point,” he said.
The governor said he will let senators know about his concerns.
“We want to be able to focus their attention on the direction we’re going, because we believe it is a good balance for the nation in the sense of trying to cut the cost curve for the federal government as well as cutting the cost curve for the state government … and putting some requirements in there that make the expanded health-care coverage more doable over the long term from a financial standpoint and from the standpoint of improving health care for the citizens,” he said.
U.S. Rep. Bruce Westerman, R-Hot Springs, said in a statement after voting for the measure, “This bill is not final, but instead, the beginning of a process to repeal Obamacare and put in place conservative legislation that gives Americans freedom in health care.”
U.S. Rep. French Hill, R-Little Rock, said the bill “is just one important step in fixing our current health care system and still must undergo review and approval by the Senate before it may be signed into law.”
“We also must continue to work with the administration and the Department of Health and Human Services to stabilize our health insurance markets and work with our colleagues in the House and Senate to enact additional legislative polices that will lower health care costs and increase competition and choices for all Americans,” he said.