Hutchinson to announce private option position, may cut some agency budgets

Gov. Asa Hutchinson said his mind is made up on the private option and he will make his vision for health care clear on Thursday in a major policy speech. However, he said his current budget proposal – which he is discussing with legislators and will release next week – does not necessarily reflect his private option plans.

“I have formed in my mind where I need to go Thursday, but we’ll make that announcement on Thursday,” said Hutchinson, who is one week into his new term as Arkansas Governor. “I would ask them (private option recipients) and everyone to broaden the debate – to broaden the debate not just within the private option consideration, but all of health care reform. That’s going to be a major part of the emphasis that I have on Thursday.”

Hutchinson is scheduled to speak to the University of Arkansas board of trustees at 10 a.m. on Thursday at the University of Arkansas for Medical Services.

“Don’t presuppose my position on the private option based upon this draft budget that we have. First of all, I have always separated the private option debate and funding mechanism with the tax cuts,” Hutchinson said.

“I delinked them a long time ago,” he added. “Whether you’re for or against the private option, no one envisions an immediate cliff. Most recognize that there’s got to be a transition, so I emphasize that whatever I say in regards to this budget should not presuppose my position that I will announce on Thursday.”

Hutchinson noted that if the private option is ended, the state will have to pick up a nearly 30% tab for straightforward, traditional Medicaid costs – the state’s share to receive federal matching dollars. In the current fiscal year, the private option is paying for 100% of the costs of Medicaid expansion, but that percentage includes funds for some recipients who may not qualify for traditional Medicaid services. In future years, if the private option continues, the state will have to pick up a percentage of federal Medicaid expansion dollars up to 10% in 2021.

Hutchinson said there are several tax proposals enacted in 2013 that go into effect this year that may be delayed as part of his balanced budget plan. He has already stated that income tax bracket reforms may be pushed back to allow for his middle class tax cut.

The governor also said that a new capital gains tax cut, sales tax relief on energy for manufacturers, and a personal income tax exemption may be delayed as part of his tax reform plan. Hutchinson said he is seeking legislative input on possible delays.

“I’ve got my views on that. They’ll be announced next week,” he said. “Let me assure you that all of those tax cuts will not be delayed.”

Hutchinson also said he will use growth revenue and possible cuts to certain state agency budgets to help balance the budget. He singled out no cuts to K-12 education and said there won’t be a 1% cut to higher education, but said other agencies are under consideration.

“There will be certainly some savings,” he said.