Changes to Arkansas Works would lower income, require work, cut around 60,000 from benefit access

Gov. Asa Hutchinson has sought waiver amendments from the Trump Administration that would add work requirements to Arkansas Works and lower the maximum income for eligibility to 100% of the federal poverty line.

Arkansas Works is the state program created in 2013 that uses federal Medicaid dollars through the Affordable Care Act to purchase private health insurance for individuals with incomes up to 138% of the federal poverty level. The federal government has paid virtually all of the program’s costs, but the state began paying 5% in January, a number that gradually rises to 10% by 2020.

The first of the requested waiver amendments would cap eligibility at 100% of the federal poverty line. Hutchinson said that change would reduce the number of beneficiaries by 20% or about 60,000 individuals. Individuals with higher incomes would move to the federal marketplace, where they could keep the same plan or choose a different one. They would be eligible for federal subsidies but not federal and state funding, as is the case now.

Under the terms of a 2016 waiver provided by the Obama administration, recipients in the 100-138% range pay a $13 fee to the state and owe a debt to the state if they fail to do so. Under the new waiver, they would pay up to 2% of their income for their insurance, which they could lose if they don’t pay.

The second requested waiver amendment would add a requirement for able-bodied recipients to work, be engaged in work training, or volunteer with a charitable organization. The requirements would be similar to those under the Supplemental Nutrition Assistance Program, or SNAP.

Under Arkansas Works’ current waiver granted by the Obama administration, recipients are referred to the Department of Workforce Services. However, Hutchinson said, of the more than 37,000 individuals referred to DWS in January, very few accessed the services. According to DHS, 628 accessed the services or reported a new job after the referral while 703 had done so beforehand.

“Why is that the case? Because its not mandatory. Because it is a simple referral,” Hutchinson said.

The third amendment would replace Arkansas Works’ current employee-sponsored insurance component with a program targeting individuals working for small businesses and earning 75%-100% of the federal poverty line. The state would provide funding for insurance premiums up to the amount it would have paid for an individual in Arkansas Works. Employees would receive the same benefits as coworkers but without additional “wraparound” benefits.

The final amendment would make Arkansas an “assessment state” rather than its current status as a “determination state,” meaning Arkansas rather than the federal government would determine eligibility.

The changes would go into effect Jan. 1, 2018.

Hutchinson said he reviewed the waiver request with Secretary of Health and Human Services Tom Price last Saturday, and Price “indicated that they’re consistent with reform efforts they want to see happen.”

“I think what you’ll see when these waivers are granted, that you’ll see lower numbers, obviously,” Hutchinson said. “You’ll see more people working and signed up for work and worker training, and you’ll see cost savings to the state and cost savings to the federal government.”

At least two of the waivers, changing the eligibility cap and making Arkansas an assessment state, would require legislation. Hutchinson and Senate President Pro Tempore Jonathan Dismang, R-Searcy, said those bills would be considered in a special session rather than the current legislative session.

According to the governor’s office, the administration’s goal is to have amendments drafted for public comment by April 15 and available for review by the federal Centers for Medicare and Medicaid Services by June 1.

Hutchinson described the changes in a press conference after the Department of Human Services announced Friday that the number of recipients dropped from 332,231 on Feb. 28 to 310,951 on March 1, a decrease of 21,280 individuals. However, the average monthly cost per enrollee increased from $478.61 at the end of 2016 to $535.19 in January and $533.64 in February.

The enrollment decrease is the result of the Department of Human Services Division of County Operations’ review of its eligibility system. The review found 12,000 cases where enrollees received a closure notice without their cases actually closing because of a system error, and more than 9,000 cases closed when individuals did not respond to a letter requesting they complete the renewal process.

The price increase was the result of increasing costs of insurance on the individual market, which the Department of Human Services pays just as consumers do, said DHS Director Cindy Gillespie. Those rate increases were approved last summer.

The total cost must go no higher than $570.50 to comply with a federal mandate that the state spend no more than it would have spent with traditional Medicaid.

On Wednesday, the full House approved the Medicaid Expansion Enrollment Freeze Act, by Rep. Josh Miller, R-Heber Springs, which would allow no new beneficiaries to be enrolled. Miller, who attended the press conference, said he supports the governor’s proposals but wasn’t deterred in trying to pass his bill. The bill is being considered by the Senate Committee on Public Health, Welfare and Labor.