Governor still optimistic about Arkansas Works, says national impact biggest impediment to clearance

Gov. Asa Hutchinson said he’s still optimistic about getting a federal waiver for Arkansas Works, his version of the Medicaid expansion proposal under the Affordable Health Act.

Hutchinson and Arkansas health officials pushed for a waiver from the federal government nearly eight months ago.

“I think it’s a combination of so many different side issues up there that take the attention away from regular business,” Hutchinson said in a press avail on Wednesday (Dec. 6).

“Everything from we’ve got an acting Secretary of HHS to the tax reform. And of course, having been in that environment myself, I understand the process. And so these kind of decisions that impact national policy have to be made not just by the CMS Director, not just within HHS, but it has to have approval of OMB. It has to have approval of the White House and so there’s a large approval process.”

Arkansas Works, formerly known as the private option, is the state program that uses federal Medicaid dollars to purchase private health insurance for more than 300,000 Arkansans with incomes up to 138% of the federal poverty line.

The state is seeking waivers from the Trump administration that would reduce the eligible income level to 100% of the federal poverty line, a change that would reduce the number of recipients by about 60,000. Individuals with higher incomes would move to the federal marketplace and be eligible for federal subsidies. 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 would add a requirement for able-bodied recipients to work, be engaged in work training, or volunteer with a charitable organization. Under Arkansas Works’ existing waiver granted by the Obama administration, recipients are referred to the Department of Workforce Services. However, few beneficiaries are taking advantage of that benefit.

The third waiver would replace Arkansas Works’ 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 a “determination state,” meaning Arkansas rather than the federal government would determine eligibility.

“I’m very optimistic about it. That hasn’t changed,” Hutchinson said. “There has been some subsequent policy issues that have been raised by the administration. I think we’ve answered those. And so while I’m a little bit frustrated with the delay, I’m more convinced than ever that it’s the right direction and that we’ll get approval.”

Hutchinson said the biggest barrier is how approval of Arkansas’ plan could impact other state requests and, if approved, how it could impact the federal budget.

“If we have the waiver, how will this impact other states that are currently non-expansion states? Will there be three other states that pursue similar types of waivers and what’s the financial impact to the federal government on that? How will this fit in with future reform of Graham-Cassidy or whatever might be passed by the House and Senate? So it’s those big picture, so it’s not a debate on whether Arkansas’ direction is a good direction for Arkansas. It’s more what’s the larger impact. And so I think, like I said, we’ve addressed those. I think we’ll be successful in the end in getting the waiver,” he said.

Hutchinson also complimented efforts to reform the federal tax system. While House and Senate members head towards a conference to iron out details of tax bills passed by each chamber, Hutchinson said he expects lower income Arkansans to benefit.

“Whenever you look at the loss of the state and local income tax exemption, 80% of Arkansas tax filers are not itemizers and therefore everyone who’s not an itemizer is going to benefit because the standard deduction goes up. And so the vast majority of Arkansans will benefit from that, even though that change is there,” Hutchinson said.

“Now there’s some that won’t and those are more of the higher income area, middle income and higher income area. And while not everyone benefits in that same vein, they will benefit from the lower overall tax structure and how it’s going to drive our economy. So I looked at it on balance and nothing’s perfect in tax reform, but I think this goes to the heart and soul of the Arkansas economy and will give us a boost and a continued strength.”

Hutchinson did voice concern in one major area of the tax reform bill. The governor said he has concerns about removing tax exemptions utilized by those who renovate historic structures.

“I’d like to see the Historic District Preservation Tax exemption or credit preserved. I think that’s in one of the versions of the bill and that will be decided in conference, but that’s something that would be helpful to Arkansas in Hot Springs, the downtown area of Little Rock and multiple parts of the state,” he said. “I think it is important. Hopefully, it will be corrected in conference.”