‘Private Option’ Funding Language Embedded In DHS Budget Bill

A major question mark for funding the “private option” health insurance expansion through federal Medicaid funds was answered on Monday (April 8).

On Monday morning, the Special Language committee amended HB 1219, the appropriation bill for the Arkansas Department of Human Services Division of Medical Services, where Medicaid is housed and administered.

The amended bill includes language from enabling legislation now being considered in the House that would enact aspects of the “private option” plan crafted largely by GOP lawmakers in conjunction with Gov. Mike Beebe (D).

That plan, found in SB 1020, provides the framework for utilizing federal Medicaid expansion funding and steering it into subsidies for low-income workers in a forthcoming health insurance exchange that is being constructed as part of the federal health care law. It also calls for other reforms and direction for the Arkansas Medicaid reform effort. A recent DHS study showed that Arkansas could save as much as $670 million during the next decade under the “private option” plan.

HB 1219 now creates a Health Care Independence Program Trust Fund that will accrue money sent from the U.S. Department of Health and Human Services to the state for the purposes of Medicaid expansion.

Along with the agreement between the state and feds on the flexible use of the Medicaid money, the trust fund will also collect:

• Increases in premium taxes
• Reductions in uncompensated care
• Other spending reductions resulting from the “private option” plan

“The fund may be used by the Department of Human Services to pay for future obligations under the Health Care Independence Program created by the Health Care Independence act of 2013,” the amendment reads.

No line-item dollar figure is expressed in the amendment regarding the federal money.

Permission to spend the funding as outlined is contingent on a three-fourths supermajority vote of both chambers of the General Assembly.

The DHS Division of Medical Services appropriation bill also includes funding for all salaries in the Medicaid division as well as billions of dollars in funding for nursing homes, prescription drugs, hospitals, infant care and ArKids First.

By folding the health insurance expansion spending permission into the DHS budget bill, a vote against the “private option” will set up lawmakers to have on their record a vote against those other constituencies.