Using novel line-item veto, Ark. governor extends Medicaid expansion

Photo by J. Stephen Conn

Arkansas Gov. Asa Hutchinson Thursday signed an appropriation bill into law and used a line-item veto to insure continuation of the state's Medicaid expansion, ending a two-week budget standoff.

The Medicaid expansion covers more than 267,000 Arkansans who make less than 138 percent of the federal poverty level (about $16,000 for an individual or a little more than $33,000 for a family of four). The expansion, which came from a 2013 compromise between Republican lawmakers and Democratic Gov. Mike Beebe. It became known as the "private option" because the state received a federal waiver to use Medicaid funds to purchase private health insurance plans for most newly eligible beneficiaries, rather than placing them in the traditional Medicaid program.

Hutchinson, a Republican, has backed continuing the policy with a few conservative tweaks he negotiated with the Obama administration.

[Also: UnitedHealth exits exchange markets in Georgia, Arkansas]

Legislation enacting the governor's plan, which he calls "Arkansas Works," passed by large bipartisan majorities earlier this month. However, the state constitution requires 75 percent of both chambers of the legislature to okay the appropriation for the Medicaid budget, which includes funding for the "Arkansas Works" program. A rump group of 10 Republican senators opposed to the policy blocked the measure last week, threatening to defund the entire Medicaid program unless the Medicaid expansion was killed.

The impasse was broken via a procedural maneuver unprecedented in Arkansas. The backers of "Arkansas Works" agreed to include an amendment to the Medicaid appropriation to end the program at the conclusion of this year. Hutchinson, however, announced that he would use the line-item veto to nix this amendment, so the Medicaid expansion would live on, fully funded.

This was enough to convince two of the 10 holdouts, Sen. Blake Johnson and Sen. Bart Hester, to approve the appropriation -- which featured the language that they wanted. Of the governor's plan to veto, Johnson said, "That's beyond my control." Those two votes were enough for the needed supermajority and the bill passed the Senate on Wednesday.

[Also: Arkansas governor: Feds back plan to preserve Medicaid expansion]

Hester had previously said that the 10 holdouts were willing to play a game of "hard chicken," but balked with the potential of a shutdown two months away. "When I realized I was not willing to shut down Medicaid, then it was like, what are we going to do now," he said.

The appropriation bill passed the House Thursday afternoon, and the governor immediately exercised his line-item veto to ensure continuation of the Medicaid expansion and signed it into law.

Hutchinson applauded "the spirit of cooperation in the General Assembly" and called Arkansas Works "a practical solution for the state of Arkansas." Of the line-item veto maneuver, the governor said that "the key thing was transparency. Everybody knew what was happening -- that's not trickery."

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.