’15 private option goes to Beebe

On 5th try, funds clear House 76-24

House Democrats applaud Tuesday after a bill to reauthorize funding for the private option finally passed. The state Senate approved the same bill Feb. 20.

House Democrats applaud Tuesday after a bill to reauthorize funding for the private option finally passed. The state Senate approved the same bill Feb. 20.

Wednesday, March 5, 2014

The House of Representatives approved funding Tuesday for the state’s private-option program after rejecting the measure in four consecutive votes last month.

The House voted 76-24 to authorize the use of $915 million in federal Medicaid dollars to buy private health insurance for more than 100,000 poor Arkansans. The Senate passed the same measure - Senate Bill 111 - by a 27-8 vote Feb. 20.

Gov. Mike Beebe has said he will sign it.

Three Republican representatives - Kim Hammer of Benton, Mary Lou Slinkard of Gravette and Les “Skip” Carnine of Rogers - voted yes Tuesday after not doing so in February. That left one vote to spare over the three fourths supermajority required for passage.

The changed votes come after nearly a week of discussions between House leaders and private-option opponents. Lawmakers decided not to limit the enrollment period for the private option as some of the bill’s critics had urged.

Hammer told the House he was voting for the funding bill because people who need the program would be hurt if it ended now. But he said the program warrants review in January.

“This is either going to be a great success, or it’s going to be a miserable failure. One of the two. And when we come back here in January, if it’s not a great success, I will be voting against it,” Hammer said.

But Rep. Joe Farrer, R-Austin, said the program would be too costly.

“Three years from now, how are we going to pay for it? Five years from now, how are we going to pay for it? Ten years from now, how are we going to pay for it? If you can’t answer those questions, why would you vote for it?” Farrer said.

Beebe said the rationale for a yes vote was stronger this year than last for two reasons.

“You had two more reasons [to support the private option in 2014]: You had the removal of the uncertainty as to whether the feds would let us do it, and you also had the tax cuts that were predicated on the savings that were generated by the private option. So, if anything, it was even more compelling this time to do it than it was the last time. Not to mention the fact you’d be throwing a hundred thousand people off health [insurance],” Beebe said.

Beebe said Republicans “backed off” the open-enrollment period but that the state had agreed to keep the Legislature up-to-date about the program’s expenses, particularly in its “high-cost areas.” He said the state would also work with legislators to make the program more efficient and limit unnecessary expenses.

But Hammer said state Department of Human Services officials had made “a commitment to develop an enrollment process encouraging personal responsibility.” Other Republicans said they were given similar promises.

“It was something that was important to me to have that commitment to develop an open enrollment,” he said. “I’ll have that in writing, maybe tomorrow, but that in my mind is part of encouraging personal responsibility.”

Several Department of Human Services staff members said Tuesday that they are no longer considering an open-enrollment plan.

“There won’t be an open-enrollment period from my understanding,” department spokesman Kate Luck said late Tuesday. “There are talks about things the department is going to do to encourage personal responsibility. But I know they are no longer discussing an enrollment period. That was taken off the table.”

Department Director John Selig said there was no commitment to open enrollment.

“I think there was concern about unintentionally increasing the Medicaid rolls by having an open-enrollment period, and people really didn’t want to do that,” Selig said.

Selig said the agency did commit to the “mix of changes” that the governor addressed, but that those were consistent with previous decisions made for the program.

“What we’ve agreed to are the things that we think make sense anyway,” Selig said.

Selig said the amendment added by Rep. Nate Bell, R-Mena, earlier this session - which prevents the state from promoting the program - will likely not have much effect, since the state was already not using funds in that way. The director said the growth of the program has largely been attributed to word-of-mouth and insurance brokers.

The Department of Human Services has said 127,051 Arkansans have been approved for coverage under the expanded Medicaid program, or just more than half of the 250,000 who were estimated to be eligible. Of those who have been approved for coverage, 93,966 had been enrolled, according to the most recent figures released by the department.

Selig said the vote will probably give momentum to other states that are considering using the private-option model, adding that Nevada was the latest to show interest in the program.

“There are a lot of states that are looking at Arkansas as a model. I think had [reauthorization] not passed, states would have had second thoughts about it and kind of wondered why. Of course, I think they realize there is a 75 percent bar to get over here,” Selig said.

The expanded Medicaid program extends private-option eligibility to adults with incomes of up to 138 percent of the poverty level - for example, $16,105 for an individual and $32,913 for a family of four.

Supporters of the program said that ending funding for the private option would strip health insurance from tens of thousands of Arkansans. Opponents argued that the federal Patient Protection and Affordable Care Act would add to the national debt and that the state would not be able to afford the 10 percent cost of the program that it will be required to pick up beginning in 2020.

Last year, the federal government agreed to pay 100 percent of the cost of the private option for three years.

In 2017, the state would be expected to pay 5 percent of the cost, or $45.75 million, if the total expenditure remained at $915 million. The state’s share would grow to 6 percent in 2018, 7 percent in 2019 and cap at 10 percent, or $91.5 million, in 2020, assuming the total remained the same.

An actuarial firm hired by the state estimated last year that the state’s actual cost will be much lower because of other ripple effects from the private option, including new state tax revenue from a surcharge on health insurance premiums, savings from spending less money to provide medical care to the uninsured and other savings across state government.

The firm, Arizona-based Optumas, also predicted that the federal dollars would generate economic activity and increase state tax revenue by tens of millions of dollars each year. Including that revenue in its calculations, the firm predicted a net savings over 10 years of $670.3 million from the private option and estimated the state’s share of the program in 2021 at $8.9 million.

Senate President Pro Tempore Michael Lamoureux, R-Russellville, said he’s“pleasantly surprised” that the funding for the private option cleared the House.

“I didn’t think it was going to pass,” he said.

Lamoureux said he was getting reports that the funding bill “would get 74 votes at most” when 75 were required for approval.

House Speaker Davy Carter, R-Cabot, said the vote took “political courage” because of how divisive the Affordable Care Act is, especially on the national level.

“It’s my perception that the realization is that there really isn’t any better alternatives,” Carter said. “I would submit that if there were, we would have probably already seen them somewhere and we haven’t. At the end of the day, I think that’s what prevailed.”

Carter said he didn’t think the election filing period, which ended Monday at noon, was a factor in how members voted.

Some observers had speculated that wavering Republican lawmakers would wait to switch their votes until after the deadline to avoid attracting a last-minute primary opponent.

Carnine and Slinkard are prevented from running for another term in the House because of term limits, and no opponent filed to run against Hammer, who is seeking his third term.

But House Democratic Leader Greg Leding of Fayetteville said election-year politics were a factor. “The votes were always there and we finally got past a couple hurdles, the filing period being one of them, and got it done,” Leding said. “I think a large part of this was that we passed the filing window and that to not get this done would have been too damaging to the state.”

Hammer said Tuesday that neither the candidate filing period nor his planned bid to be the next speaker of the House for the 90th General Assembly played a role in his decision.

“There were no deals struck on my part. Principles are principles. That’s what I tried to articulate on the floor,” he said. “This was a decision based on the merit of me gathering information and making a decision to the level of confidence that I have to live with when I walk out of here.”

As to whether it would affect his race for speaker, he said, “It was the last thing on my mind today when I voted.”

Hammer said his decision to vote yes was largely based on not having an exit strategy or a plan for what to do with the people who had already enrolled. “The other thing we need to have is we don’t have an exit strategy for what to do with all these people who are on the plan now. I think it would be very insensitive for us to tell those people that we don’t have a plan for you anymore,” he said. “We have to put an exit strategy in place between now and December. … I don’t think it’s right that we cancel people without giving it a chance to work.”

Slinkard said through a House staff member that she would not comment on the vote.

Carnine said his vote change centered on it being “time to move on.”

“I didn’t ask people to vote for it, and I didn’t ask people to vote any which way,” he said. “I just tried to let it play itself out and I just felt like the point was it was time to move on. I’m convinced that this will be a major discussion in the election in November and a lot of people will say we’re going down the wrong trail … and this will change overnight [with that election].”

Earlier in the day, the Joint Budget Committee’s Special Language Subcommittee voted to approve an amendment proposed by Sen. Johnny Key, R-Mountain Home, transferring the amount awarded to the state from a lawsuit filed by Attorney General Dustin McDaniel from the Medicaid trust fund to the Health Care Independent Program Trust Fund, which is the trust fund for the private option.

Key proposed adding the amendment to House Bill 1129, an appropriation measure for the Department of Human Services in fiscal 2015.

“If this award is at the level that it could be, this certainly will take care of a lot of the future costs of the private option, should it be upheld and should it carry forward,” Key said. “A number of members have expressed their concern on future cost and this would take care of those costs for a number of years.”

Last week, an attorney for the state told the state Supreme Court that the $1.2 billion fine against Johnson & Johnson and a subsidiary for Medicaid fraud was not excessive because the company continuously put patients in danger by improperly exposing them to the side effects of the anti-psychotic drug Risperdal.

Front Section, Pages 1 on 03/05/2014