Arkansas governor: Feds back plan to preserve Medicaid expansion

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Arkansas Gov. Asa Hutchinson said Wednesday that federal officials have approved most of his requested changes to the state's Medicaid expansion program and urged the legislature to continue it.

Negotiations over the details will continue, the governor told the state's health reform task force, but he said Secretary of Health and Human Services Sylvia Burwell "accepts the framework" that he presented to her in a meeting in Washington earlier this month. That includes premiums and co-pays, as well as work referral programs, for some beneficiaries. However, federal officials rejected a controversial request for an asset test that would impose a fee on beneficiaries with substantial assets, such as a house valued at $200,000.

In a letter to the governor, released Wednesday, Burwell wrote that Hutchinson's ideas for changes were "innovative" but "[i]n some cases, they also push the bounds of what is allowable under federal Medicaid law and raise concerns about potential adverse impacts on beneficiaries. However, I am hopeful that we can work together to find acceptable approaches to reform in each of your focus areas."

[Also: Obama budget would lift HHS spending to $1.1 trillion, entice Medicaid expansion]

Arkansas expanded Medicaid in 2013, when then-Gov. Mike Beebe, a Democrat, worked with a Republican-controlled legislature to craft a bipartisan compromise that became known as the "private option": The state received a waiver from federal rules to use Medicaid funds to purchase private health insurance plans for most newly eligible beneficiaries, rather than placing them in the traditional Medicaid program. More than 250,000 Arkansans who make up to 138 percent of the federal poverty level -- about $16,000 for an individual and $33,000 for a family of four -- are now covered by the expanded program.

That waiver expires at the end of 2016, and Hutchinson -- Beebe's Republican successor -- proposes continuing the coverage expansion with the GOP-friendly tweaks he discussed with Burwell.

Hutchinson calls his new program "Arkansas Works" and Wednesday he presented details on the broad policy framework approved by federal officials.

Under Arkansas Works, Medicaid-eligible beneficiaries who are employed and are offered insurance at work would be required to enroll in those plans rather than Medicaid. The governor would have Medicaid pay the difference in costs to beneficiaries as well as provide any Medicaid benefits not offered by the employer plan.

Arkansas Works will also include work-encouragement elements--state agencies will refer unemployed beneficiaries to job training and job search programs. Beneficiaries might receive incentives to participate, such as additional dental and vision coverage. However, beneficiaries won't be required to have a job and won't lose coverage if they don't participate.

[Also: Governor seeks new concessions from CMS to maintain Arkansas' medicaid expansion]

Beneficiaries who make more than the federal poverty level would be assessed premiums of $19 per month, as well as small co-pays. The governor provided no details about the co-pays. The premiums and co-pays would potentially be waivable if beneficiaries followed wellness programs encouraging healthy behaviors. Beneficiaries who fail to pay would incur a debt to the state but maintain coverage.

Hutchinson urged the legislature to vote for Arkansas Works when it convenes for a special session in April. The governor said that if the state kills the Medicaid expansion, it will face an immediate hole of more than $100 million in next year's budget. Under the health law, the federal government pays all the costs of Medicaid expansion for three years, with the states paying a small share in the future.

Getting legislative approval won't be easy. Under the state constitution, a 75 percent majority of lawmakers in both chambers would have to approve it.

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