Gov. Asa Hutchinson says Arkansas will explore Medicaid block grant waiver

Gov. Asa Hutchinson said Thursday (Jan. 30) that Arkansas will explore a waiver for a block grant for its Medicaid program.

The Trump administration announced earlier in the day that it would allow states to convert a portion of their Medicaid funding to block grants through a program called “Healthy Adult Opportunity.” The block grant approach would allow states to tailor their Medicaid spending towards lower income residents, and would cap the spending versus the open-ended federal-state match approach currently deployed.

Health care advocates predict legal challenges to the policy as well as Democratic opposition to the change.

Hutchinson said the policy change would modernize Medicaid and create a stronger federal-state partnership.

“The announcement today by the Trump administration giving states the opportunity to apply for a block grant is good news for everyone who believes the states should have more flexibility in managing one of the most expensive items in a state’s budget and managing the delivery of health care services to the most vulnerable citizens,” Hutchinson said.

“The block-grant authority is something that we’ve asked for, and I applaud CMS Administrator Seema Verma and Health and Human Services Secretary Alex Azar for leaning forward to recognize that the states can manage these types of health care programs in an effective way,” he added.

“At this point, we have the Arkansas Works waiver. But we will immediately begin to review the specific model and guidelines that the Trump administration issued today to see how this would fit into an Arkansas-type approach for providing health care to the expanded Medicaid population. It should be noted that the Arkansas General Assembly has already passed legislation that directs the state of Arkansas to pursue a block-grant waiver once it is authorized by the federal government. I look forward to working with legislators as well as the Trump administration on the next steps for Arkansas,” Hutchinson said.

Dr. Joe Thompson, Arkansas Center for Health Improvement President and CEO and a former state surgeon general, said Arkansas’ leadership position on Medicaid expansion may have been a catalyst for this latest proposal. He said its complexity merits a closer study before pursuing.

“This represents a new and important set of options that CMS is proposing to offer states. It recognizes the value of the innovative approach our state took in expanding Medicaid to low-income adults by relying on the private insurance market, and it supports other states’ consideration of that approach. Like any complex proposal, it needs to be closely examined to identify new options and potential risks,” Thompson tells Talk Business & Politics.

The Arc, which advocates for and serves people wit­­h intellectual and developmental disabilities, including Down syndrome, autism, Fetal Alcohol Spectrum Disorders, cerebral palsy and other diagnoses, warned that the block grant approach could have severe direct and indirect effects on its population.

It says per capita caps could limit the amount spent per enrollee, could allow states to restrict eligibility, reduce access or benefits, and impose work requirements on those unable to work.

“Medicaid equals access to health and wellbeing for millions of people, including people with disabilities, their family members, and their direct support professionals. This decision is a blow to the entire disability community. It also begs the question – once they block grant one part of the program, what’s stopping them from moving on to the home and community-based services that make independence and community possible for people with intellectual and developmental disabilities?” said Julie Ward, Senior Executive Officer for Public Policy with The Arc, which has an active Arkansas chapter.

Ward also said the restructuring of the program will impact all aspects of the Medicaid program if states are not able to operate their programs under the cap. She said this could lead to state shortfalls, which could have ramifications ranging from reduced provider rates, spending reductions, and reduced services.

“This effort is a major change to the Medicaid program as we know it, and we are very concerned that it’s just the beginning of bad news for Medicaid in 2020,” said Ward.

Rich Huddleston, executive director of Arkansas Advocates for Children and Families, said his group is concerned about participating in a block grant Medicaid program.

“A block grant or per capita cap would eventually mean less federal funding for Arkansas,” he said. “It does nothing to address the real health crises we are facing, including the opioid epidemic, high infant and maternal mortality, and the state of mental health in Arkansas. And it could threaten the state’s ability to effectively respond in times of need like during an economic downturn, a major flu outbreak, or a natural disaster. It limits who Medicaid can help, and when it can help them —which puts us all at risk.”