Arkansas cuts Medicaid rolls by 117,000 in 2017, now less than 1 million

After Arkansas celebrated topping more than 3 million residents last month, Gov. Asa Hutchinson and state human services officials on Thursday (Jan. 4) heralded another key milestone that involved nearly one-third of that population.

According to Gov. Hutchinson and Department of Human Services (DHS) Director Cindy Gillespie, Arkansas reduced the state’s one million-plus Medicaid count by 10% in the past year as part of the state’s ongoing effort and transformation to pare rise costs for federal-state program that helps low-income individuals with medical-oriented expenses.

Holding up a newly-minted Medicaid report for January 2018, Hutchinson told reporters at one of his occasional pen-and-pad sessions that there are 931,006 Arkansans enrolled today in Medicaid programs in Arkansas, 117,260 fewer enrollees than a year ago. The new tally also includes 285,564 Arkansans who receive healthcare through the state’s highly-touted Arkansas Works Medicaid expansion program under the Affordable Care Act.

“That is a significant, significant difference from where we were a year ago,” Hutchinson told nearly 20 reporters squeezed into his personal office.

Hutchinson later explained that Medicaid costs have declined in Arkansas over the past year due to several reasons, including DHS-led efforts across state agencies to improve the accuracy of the state’s Medicaid count and timely processing of Medicaid cases to ensure enrollee eligibility.

Hutchinson said DHS is also sharing data with other state agencies such as the state Department of Workforce Services to identify duplicate services and other enrollee information. But the job-focused Republican governor added that one of the other “good news stories” on fewer Medicaid enrollees across Arkansas was the fact that more people are finding jobs, highlighted by the state’s historically high employment levels and all-time low unemployment rate in 2017.

“More people are working today than any other time in Arkansas history,” Hutchinson said. “And when more people are working and moving up the economic ladder, it means that more people are moving off Medicaid in terms of the traditional program and the expanded (Arkansas Works).”

Those initiatives, along with implementing recommendations made by the legislature’s Health Care Task Force, has led to net savings of $77 million to the state of Arkansas through fiscal year 2017. According to Hutchinson, DHS now expects to meet its 5-year, $835 million saving targets resulting from those efforts.

FISCAL SESSION BUDGET HEARINGS NEXT WEEK
Gov. Hutchinson and Gillespie released the new data on the state’s Medicaid costs ahead of next week’s scheduled legislative budget hearings for the General Assembly’s upcoming biennial fiscal session that begins on Feb. 12 at the State Capitol.

The Joint Budget Committee will hold hearings on Tuesday on the budget requests for Higher Education institutions, Department of Education Public School Fund Account, the Department of Human Services, Department of Health, Department of Correction and the Department of Community Correction, commonly referred to as the “Big 6.” Other agencies may be heard after receiving approval from the Legislative Council or the Joint Budget Committee.

In a recent interview with Talk Business & Politics, Rep. Lane Jean, R-Magnolia, co-chairman of the legislative budget panel, said the fiscal session will be “dominated” by discussion on ways to cut Medicaid costs, including outlays for Arkansas Works.

“We have to get a handle on that,” Jean said ahead of next week’s hearings, which he will co-chair with Sen. Larry Teague, D-Nashville.

Due to the reduction of the number of people on Medicaid, DHS is now projecting that it will spend $477.9 million less on Medicaid in fiscal year 2019 than was anticipated at this time last year in the biennium Medicaid budget appropriations bill. The legislative task force has spent three years studying ways to address rising costs to the federal program as the Arkansas Works program has expanded.

Hutchinson also reiterated that he still believes DHS will receive a long-awaited approval of federal waivers from the Trump administration for the Arkansas Works program. Formerly known as the private option, Arkansas Works uses federal Medicaid dollars to purchase private health insurance for the 285,000 or so Arkansans with incomes up to 138% of the federal poverty line.

DHS officials have been waiting since March for approval of the request to continue Arkansas Works reforms passed by the state legislature earlier this year. Those waivers, which must be approved by CMS, would cap income 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.

If the waiver goes through before the end of the year, individuals with higher incomes would move to the federal marketplace, where they could keep the same plan or choose a different one. They would also 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 insurance, which they could lose if they don’t pay.

Nearly a year ago, the legislature approved Gov. Hutchinson’s $50.5 million plan for the second round of tax cuts in his tenure as governor as part of his balanced budget for the biennium. That budget plan included a $5.5 billion budget for fiscal year 2018, which ends on June 30, 2018, and called for a robust 4.4% increase in general revenues in fiscal year 2019 of $5.7 billion, up $964.6 million from fiscal year 2018.

Gov. Hutchinson told reporters during Thursday’s news conference he will outline his updated budget for fiscal year 2019 that begins on July 1, 2018 at next week’s budget hearings, including a $47 million budget cut related to Medicaid. The Republican governor, however, refused to divulge other details.