Gillespie: Arkansas Works changes will reduce costs without increasing uninsured

Changes sought by the state of Arkansas to the Arkansas Works program would reduce enrollment by more than 60,000 individuals and reduce the state’s costs by between $67 million and $93 million over four years, but Department of Human Services officials hope the increase in uninsured Arkansans will be “minimal,” they said in a briefing with reporters Wednesday.

The changes will require legislation that will be considered during a special session of the Legislature May 1-3. The legislation would give the state the statutory authority to seek reforms to the program through a waiver amendment that must be approved by the federal government.

Arkansas Works is the state program that uses federal Medicaid dollars under the Affordable Care Act to purchase private health insurance for individuals with incomes up to 138% of the federal poverty level. It was created in 2013 after the U.S. Supreme Court ruled states had the option of expanding their Medicaid populations. Instead of doing that, Arkansas received a waiver from the Obama administration allowing it to purchase that insurance through the private markets. As of March 3, 310,893 individuals were covered.

Previously known as the private option, it has been funded almost entirely by the federal government until this year, when the state began picking up 5% of the tab. That number grows over time to 10% by 2020.

The changes to be considered by legislators could save the state between $800,000 and $1.8 million in fiscal year 2018 but save between $28.9 and $40.5 million in fiscal year 2021, the DHS officials said. The total over four years would range between $66.6 million and $93.4 million

If legislators pass the required legislation, the waiver amendment would be drafted by May and submitted to the federal Centers for Medicare and Medicaid Services by June. If approved, they would go into effect Jan. 1.

Gov. Asa Hutchinson’s spokesman, J.R. Davis, said Tuesday the governor is very confident the federal government will grant the waiver request.

“We’ve had constant communication with (Department of Health and Human Services) Secretary (Tom) Price and Vice President Pence, and we’re very confident in what we submit to HHS will be approved,” he said.

Speaker of the House Jeremy Gillam, R-Judsonia, said Tuesday that he does not expect much controversy in the Legislature over the requests, but he can’t be certain.

“Any time you bring all 135 of us back together, there’s always a chance” for a problem, he said. “I foresee a fairly smooth special session, but I learned a long time ago, don’t predict those kind of things. But everybody knows what’s out there and what we’ve been talking about.”

The Arkansas Department of Human Services is seeking two changes to that waiver that are intended to reduce the number of beneficiaries and require them to work or seek job training. Two other changes will be considered by legislators during the special session.

The four changes were described in a meeting with reporters Wednesday led by DHS Director Cindy Gillespie, Deputy Director for Health and Medicaid Director Dawn Stehle, and Interim Deputy Chief Financial Officer for Medicaid Dave McMahon.

The first waiver change would reduce the maximum income eligibility level from 138% of the federal poverty line to 100%. That change would remove 61,794 individuals who were enrolled March 3, leaving 249,099. About 5,000 would come off the rolls each month over the course of a year.

Those individuals could obtain coverage through their employer or could purchase it on the insurance exchange, which also was created by the Affordable Care Act. They could keep the same plan they have under Arkansas Works and receive a government subsidy that would do little to change their insurance costs and would reduce the state’s responsibility for the cost from 5% this year to zero.

Gillespie said she expected the number of uninsured Arkansans to increase minimally based on what has happened in other states.

“Working together, we think we can keep it very minimal, but it does require work,” she said. “The insurance carriers are critical, critical, critical partners in making this work. … We don’t see ourselves as just saying, ‘Good luck,’ and dropping people off. We see it very much as a handoff.”

As of this year, beneficiaries with incomes between 100% and 138% of the federal poverty level are required to pay $13 on their premiums. Those that don’t owe a debt to the state, which the state cannot collect except through lottery winnings. Only 25 percent of recipients are making the payments, said Stehle and Gillespie. If those same recipients move to the insurance exchange, they’ll be required to pay between $13 and $19 or risk losing their insurance. The carriers will help enforce the requirement.

DHS is hoping the changes will improve the percentage of people paying for their benefits to between 50% and 80%. Gillespie said that when Indiana began enacting similar policies, compliance rose to 88%, and at the end of the year only 6% had lost their benefits.

A second waiver change would institute a work requirement that would mirror requirements for individuals receiving Supplemental Nutrition Assistance Program benefits. The requirement would not apply to individuals ages 50 and over, those classified as medically frail, those with dependent children, full-time students and others.

That leaves about 88,000 individuals ages 19-49 who would be required to work 20 hours a week or engage in other activities, such as on-the-job training, taking GED classes or participating in volunteer “workfare activities.” The program would be phased in over two years starting with beneficiaries ages 30-49 in 2018 followed by beneficiaries ages 19-29 in 2019.

Gillespie said an added challenge will be that 68,000 of those individuals – more than three-fourths – have no income.

Another challenge: About 21,000 Arkansas Works enrollees have been incarcerated.

Meanwhile DHS is seeking two changes to the law that would not be part of the waiver.

One change would create a study to be completed by October for helping small employers offer more affordable health insurance coverage for employees. Subsidies are only offered for employer-based insurance if the coverage is “affordable,” meaning premiums cost no more than 9.69% of the recipients’ income. A study of current recipients found two-thirds of those with incomes above 100% are employed at 10,962 employer groups, but probably only about 20% offer insurance.

The final change to Arkansas law would give the governor the option of making Arkansas an “assessment state,” meaning it determines eligibility for benefits, instead of a “determination state,” its current status where the federal government makes those decisions.

Gillespie and Stehle said there have been cases where the federal government listed an individual as a “28-year-old newborn” or listed them by the wrong gender, which led to problems when they sought medical care.