Arkansas House approves $8.1 billion state Medicaid expansion budget on second chance

In a marginless vote of 75-18, the Arkansas House on Tuesday (April 2) approved the $8.1 billion appropriations for the state’s Medicaid expansion program and other state Department of Human Services priorities only days after soundly rejecting the same measure.

All state budget bills must be approved by both the House and Senate by a three-fourths vote, meaning the 75 votes for Senate Bill 99 left no room for error. Last week, House Speaker Matthew Shepherd, R-El Dorado, predicted that the 100-member lower chamber would back the DHS-Medicaid biennial budget.

“We’ve been through these kinds of things before,” Shepherd told reporters after Friday’s failed 52-28. “I am optimistic that we can make the case. And with more time, that’s something that is beneficial at this point.”

Unlike last week when several House Republicans spoke against SB 99, there was very little debate on Arkansas Works or the DHS appropriations. Rep. Mary Bentley, R-Perryville, was the lone legislator to come to the House floor to speak against the bill, telling fellow lawmakers that rising Medicaid costs were unsustainable.

Last week’s failed vote occurred only two days after an adverse federal court ruling by U.S. District Judge James Boasberg regarding a “work requirement” approved by lawmakers during the 2017 session. That program forced health care recipients enrolled in the state’s Medicaid expansion program, known as Arkansas Works, to report their search for work, get workforce training, or qualify for an exemption to the work requirement.

In the judge’s ruling, Boasberg ruled that U.S. Department of Health and Human Services Secretary Alex Azar’s decision to grant Arkansas the work requirement waiver was “arbitrary and capricious because it did not address – despite receiving substantial comments on the matter – whether and how the project would implicate the ‘core’ objective of Medicaid: the provision of medical coverage to the needy.”

Arkansas was the first state to implement a work requirement waiver, but Boasberg said it could not stand. Likewise, the Washington, D.C.-based federal judge relied on an earlier ruling against Kentucky’s work requirement he had made in June 2018.

On Thursday, Gov. Asa Hutchinson told reporters he is asking HHS Azar along with the Department of Justice to seek an expedited appeal of the decision nullifying the Arkansas Works work requirement. Hutchinson said that giving up on the program would mean giving up the opportunity to lead nationally.

The Arkansas Works portion of the $8.1 billion DHS budget would cost the state about $1.3 billion. Joint Budget Co-chair Rep. Lane Jean, R-Magnolia, said even if the federal government’s appeal of last week’s ruling failed, the state’s fiscal officials had sufficiently budgeted enough to cover the estimated extra $20 million expense it would take to pay to provide health coverage to the thousands of Arkansans that were pushed off the program.

As a result of the federal ruling, state DHS officials have shut down a link to the state’s online reporting portal and put a notice on the website. The state has also removed a provision in the work requirement waiver received a year ago from the Trump administration moving retroactive coverage for new enrollees to 30 days prior to enrollment. That date will now move back to the original 90 days.

Hutchinson said he remains committed to Arkansas Works and the work requirement, adding the judge did not strike down the work requirement based on its reporting requirements.

“He had a fundamental disagreement with the work requirement in and of itself. His view is that Medicaid is an entitlement program, and you cannot place additional requirements that may lead to a loss of coverage.” He said the judge recognized that his own ruling could be a “pause.”

In 2018, 18,164 enrollees lost coverage for failing to meet the requirement. Of those, 1,452 of those recipients gained coverage in 2019, including 1,441 of them in Arkansas Works. More than 13,000 recipients of the state’s Arkansas Works program did not meet its work requirement in February. A total of 6,472 have not met it for two months this year and faced losing their coverage if they did not comply in March.

The Arkansas Senate, by a vote of 27-4, has already approved funding for the DHS’ Division of Medicaid Services, the agency that administers Medicaid. The adoption of the state’s Medicaid budget will now allow lawmakers to expedite the balanced budget process by adopting the Revenue Stabilization Act (RSA), which allocates general revenue to state agencies and sets state spending priorities.

Before the 2019 session started, Gov. Hutchinson outlined a $5.75 billion budget request for the upcoming fiscal year 2020 that would increase by 2.3%, or $125 million above the fiscal 2019 budget of $5.6 billion, which ends June 30, 2019. The 2021 fiscal budget request would rise another 2.3% to nearly $5.88 billion.

Shepherd and Senate President Jim Hendren, R-Sulphur Springs, have both said they hope to “sine die” or adjourn the 2019 session by April 12.