Committees approve Arkansas Works as bills head to both chambers

The House and Senate Insurance and Commerce Committees separately approved bills creating Gov. Asa Hutchinson’s Arkansas Works legislation Wednesday, giving the full chambers the chance to vote on the legislation Thursday.

Arkansas Works would continue the private option, which is the government program where the state uses federal dollars to purchase private health insurance for about 250,000 people with incomes up to 138% of the federal poverty level. The poverty level is $11,880 in a household size of one. Created in 2013, the private option expires at the end of this year.

Hutchinson wants to extend the private option under a new name, Arkansas Works, with four changes:

– Enhancing work and work training referrals for people who benefit from the program
– Requiring those beneficiaries whose incomes are between 100-138% of the federal poverty level to pay $19 a month towards the cost of their insurance premiums;
– Requiring individuals who can obtain health insurance through their employers to do so rather than rely on the government program
– Reducing costs and making the program more responsible with taxpayer dollars

The bills advanced through the committees easily on voice votes. In the eight-member Senate committee, only Sen. Terry Rice, R-Waldron, was heard to vote no. In the 20-member House committee, Rep. Bruce Cozart, R-Hot Springs, and Rep. Robin Lundstrum, R-Springdale, were heard in opposition.

The private option and Arkansas Works were made possible by the Affordable Care Act, which created Obamacare. Under the act, states were expected to expand their populations served by Medicaid, which serves lower income people, to residents making up to 138% of the federal poverty level. The private option instead uses that Medicaid money to buy private insurance.

The bills’ sponsors, Sen. Jim Hendren, R-Gravette, and Rep. Charlie Collins, R-Fayetteville, presented the bills – Hendren in the Senate, and Collins in the House. Both expressed their opposition to the Affordable Care Act, and Hendren opposed the private option when it was created in 2013. But they argued that ending the program now would cause great financial damage to the state and its health care industry and that it would be unwise for Arkansas to turn down the federal dollars when other states aren’t. Collins said that even Donald Trump would describe the private option as a good deal for Arkansas.

Using information provided by a legislative task force’s consultant, The Stephen Group, the two said that Arkansas Works will bring about $9 billion in federal funds into Arkansas through the Affordable Care Act from 2017-21. That amount will more than offset the $5 billion the state will lose because of the Affordable Care Act. Without Arkansas Works, the state will simply lose that money.

They said that, without Arkansas Works, hospitals would be required to provide $1.816 billion in uncompensated care over that time period – $1.072 billion more than they will have to pay if Arkansas Works is passed. Dr. Dan Rahn, chancellor of the University of Arkansas for Medical Sciences, testified that even with the private option, his hospital’s uncompensated care costs are $14 million per quarter, and that without Arkansas Works, his hospital and university would have to make major reductions in their offerings.

Seventy-one rural hospitals nationally have closed since the beginning of 2010 – 52 of them in states that did not expand Medicaid. None have closed in Arkansas. According to research by iVantage Health Analytics, there are 673 financially vulnerable hospitals in the United States, and 19 of them are in Arkansas.

As for state government, Arkansas Works will have an estimated $757 million positive impact on revenues from 2017-2021, including saving the state $213 million in spending while generating $544 million in revenues from taxes on insurance premiums and from an increase in tax collections from sources such as hospital staff salaries, Hendren and Collins said.

Rice, the lone no vote in the Senate Insurance and Commerce Committee, was not convinced. He asked about unintended consequences and said the expansion of government is increasing the $19 trillion national debt.

“I want to be as helpful to people as I can, but we are enslaving future generations, our children and grandchildren, to debt that we are irresponsibly putting on their credit card,” he said.

David Ray, director of the Arkansas chapter for the small government advocacy group Americans for Prosperity, spoke against Arkansas Works. He said the new spending will add to the national debt and make Arkansas dependent on the federal government, which can’t be trusted to keep its promise to pay 90% of the program’s cost.

“We cannot fix a broken welfare system by expanding it further,” he said.

In his testimony in the House, Collins said the private option/Arkansas Works is responsible for only a small part of the national debt and that Arkansas shouldn’t reject the money if other, richer states are accepting it.

“I’m a hundred percent in for killing Arkansas Works and taking our $5 billion that we have sucked out of Arkansas taxpayers and put in a big old bucket behind the White House, but I’m only willing to do it on one condition,” he said. “Here’s the condition: Not only punishing our people.”