Medicaid deal right for state, Beebe says

‘Big superproject’ close, lawmakers told

Gov. Mike Beebe greets House members Tuesday as he works his way down the aisle to give his address to a joint session of the Legislature.
Gov. Mike Beebe greets House members Tuesday as he works his way down the aisle to give his address to a joint session of the Legislature.

— Gov. Mike Beebe again made the case Tuesday for expanding Medicaid to 250,000 poor Arkansans in a speech before members of the Arkansas Legislature.

He also announced that slower-than-expected growth in the cost of the existing Medicaid program could allow the state to keep funding nursing care for senior citizens.

Also Tuesday, Beebe said he is close to announcing a major economic-development project, which he called one of the largest in state history.

The speech, given before a joint session of the House and Senate on the second day of the 89th General Assembly, was Beebe’s last State of the State address.

In the 2013 legislative session, Beebe, a Democrat, will have to work with a Republican majority for the first time in his 30 years in Arkansas politics. The Republican Party holds a majority in both chambers for the first time in over 100 years.

“There’s been a lot written and said about how different this legislative session will be because of who you are and where we are,” Beebe said. “There’s been a lot written and said about how different this legislative session will be because of who I am. My instincts tell me this session will not be that difficult for either of us.”

So far, the most-discussed topic is whether to expand Medicaid eligibility, as allowed under the federal Patient Protection and Affordable Care Act of 2010.

Beebe has advocated for the expansion, saying it will provide health care to people not covered elsewhere in the law, will reduce uncompensated care and will protect hospitals that will experience cuts to Medicare reimbursement rates whether or not the state chooses the expansion. The federal government will pay 100 percent of the cost of new enrollees until 2017. At that point the state’s share will gradually increase to 10 percent by 2020.

Some, mostly Republican legislators, say they are concerned about how the state will afford its share of the cost in the future, especially in light of financial problems with the state’s existing Medicaid program.

Beebe said he doesn’t want lawmakers to reject the expansion just because they disagree with the federal health-care law or are worried about the national debt.

“We don’t need to sacrifice our share of federal money to other states. Refusing money to help our people may make a statement to the federal government, but it will cost us more at home, will jeopardize the health of our fellow Arkansans and won’t solve the problems of our national counterparts,” he said.

Consideration of the expansion could be helped by what Beebe said Tuesday. He said the state’s projected $298 million Medicaid shortfall in fiscal 2014 could be less than expected. The shortfall affects the state’s current $5 billion state and federally funded Medicaid program that serves about 780,000 Arkansans, mainly children, the elderly and the disabled.

Department of Human Services spokesman Amy Webb said it could be two weeks before the department is finished calculating the new shortfall estimate.

Webb said Medicaid has averaged a growth rate of 6 percent per year for the past five years. In the past six months, the program has grown at a rate closer to 3 percent, she said.

Beebe has proposed spending an additional $160 million on Medicaid in fiscal 2014, a move that — according to earlier estimates — would lower the shortfall to $138 million.

The department had also outlined potential savings in three areas: efficiency, worth $35 million in both fiscal 2014 and fiscal 2015; freezing provider rates and not raising rates at the rate of inflation, worth $38 million each fiscal year; and service cuts such as stopping adult dental care or some nursing care, worth $57 million in fiscal 2014 and $116 million in fiscal 2015.

Webb said the department expects to still go forward with the efficiency proposals and rate freezes. She said that once the projected shortfall is recalculated, it’s possible that all cuts to services could be avoided, not just the cuts to nursing care.

Senate President Pro Tempore Michael Lamoureux, RRussellville, said he doesn’t believe that Beebe changed any senators’ minds about the proposed expansion of the Medicaid program during what he called “a good speech.”

“The same obstacles that were in place are still there, and we are going to work through it in a methodical manner,” he said.

If a vote were held now, Lamoureux said he would be surprised if the Senate wouldn’t have a party-line vote on the proposed expansion at this point.

“I think most Republican members start out skeptical [about the proposed expansion] but are willing to be persuaded. But the persuasion hasn’t happened yet. It is still too early,” Lamoureux said.

Asked about the prospects for the proposed Medicaid expansion in the Senate, Senate Democratic leader Sen. Keith Ingram of West Memphis noted that Republican Gov. Jan Brewer of Arizona now favors Medicaid expansion in her state.

Some Republican legislators, particularly in the House, campaigned against the proposed expansion as they won primary and general elections in 2012.

“Sometimes when we run campaigns, we don’t necessarily have all the facts and the information that you have the ability to get here,” Ingram said. “Some people may look at this and understand maybe that they didn’t have all the facts.”

House Speaker Davy Carter, R-Cabot, said members need more time to understand the issue before talking about expanding.

“[Beebe] talked about getting comfortable with the numbers and the math, something that I’ve also said. All the membership needs to get as comfortable with the numbers as the governor is,” Carter said.

Carter said he still isn’t convinced that the federal government will pay 90 percent of the cost starting in 2020. He said he is concerned that Congress will change the health-care law and require states to pay a greater share of the cost.

“We’re one congressional compromise away from that changing,” Carter said. “So, we have to make these long-term decisions today on Arkansas’ Medicaid expansion with all of that other in the back of our minds. There aren’t any guarantees that it’s going to be a 90-10 split forever.”

House Republican leader Bruce Westerman of Hot Springs said he still has unanswered questions.

“I’m not seeing these working poor identified yet,” Westerman said. “We’ve heard the number 250,000 but I’m not sure where they’re getting that number, what the demographics are, where they’re located throughout the state or even if they can handle that influx of people into the existing system.”

Westerman said it was not necessarily a bad thing to disagree on Medicaid and other issues.

“You can’t have partisan politics without two people disagreeing,” Westerman said. “I don’t think we should just automatically go out and label it partisan politics and say it’s a bad thing.”

Sen. Joyce Elliott, D-Little Rock, said the Legislature needs to see that Arkansans want the expansion.

“If the people will get behind it, which it seems to me they surely should, then the legislators will have the ... support they need to do the right thing,” Elliott said.

SUPERPROJECT IN WORKS

Beebe also briefly touched on an economic development project he has touted.

“We continue to work toward bringing new jobs and investment to Arkansas, and I plan to ask your help to bring in one of the biggest projects this state has ever seen,” he said.

After the speech, Beebe said he didn’t make an announcement Tuesday about “a big superproject” because, “we still got one hang-up on it.”

Asked how many jobs that proposed project would create, he replied, “A bunch ... Just wait and see.”

Beebe would have to ask the Legislature to approve the issuance of bonds for the proposed superproject under Amendment 82 to the Arkansas Constitution, Beebe spokesman Matt DeCample said.

The bonds would be used to cover part of the financing for the project, Arkansas Economic Development Commission spokesman Joe Holmes said.

“It’s a billion-dollar-plus investment. There are still a few things that are being ironed out and we feel positive it will move forward. Once that is final, it will be announced and you will know much more,” Holmes said.

In 2004, Arkansans approved a constitutional amendment to allow the state to use up to 5 percent of its general revenue to issue general obligation bonds. The bonds would finance infrastructure as a way to bring major projects to Arkansas.

In 2010, voters approved a change in Amendment 82 to allow the Legislature to set standards for when companies would be eligible for bonds to be issued for infrastructure on a case-by-case basis. The previous requirement was that the business would have to plan to create at least 500 new jobs and invest at least $500 million.

Front Section, Pages 1 on 01/16/2013

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