Medicaid expansion gets nod as Arkansas House passes $8.2B spending bill

After months of uncertainty, the Arkansas House of Representatives on Wednesday approved a measure giving spending authority of $8.2 billion to the state Division of Medical Services and clearing the way for the continuance of the state's Medicaid expansion in the coming fiscal year.

Pushing spending authority for the division through the Republican-controlled Legislature has been a chore since the Medicaid expansion was authorized in 2013, but it passed in both chambers on the first attempt this week.

It's the second year that the appropriation cleared the House and Senate during the initial vote. That also occurred during the 2015 regular session during Republican Gov. Asa Hutchinson's first session in office.

After passing in the shorthanded state Senate with no votes to spare Tuesday, Senate Bill 30 cleared the House on Wednesday with four votes over the required three-fourths threshold and without any floor debate.

Of 99 House members, 79 representatives voted for the bill, 15 voted against it, two voted present and three didn't vote. The House has one vacancy; the Senate has three.

The appropriation -- which includes $5.7 billion in federal funds -- authorizes spending authority to provide health insurance coverage for more than 930,000 low-income Arkansans on traditional Medicaid and the state's Medicaid expansion known as Arkansas Works.

The Department of Human Services has projected that the Arkansas Works program will cost about $135 million in state funds and about $1.95 billion in federal funds in fiscal 2019. Arkansas Works provides health insurance for about 285,000 Arkansans. The state covers 6 percent of the cost of the program this year, 7 percent next year and then 10 percent in 2020 under current federal law.

The bill now heads to Hutchinson, who is expected to sign it into law.

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"The early prediction was that the General Assembly would not pass the DHS appropriation and Arkansas Works," the governor said in a written statement. "I am pleased that the Senate and the House disproved the popular opinion and passed the bill. The fact that we passed it on the first vote in both houses shows a spirit of cooperation between the branches."

There had been widespread uncertainty about whether Hutchinson and other supporters of the Medicaid expansion would be able to get the required 27 votes in the Senate for approval of the appropriation because of the three vacant seats in the 35-member Senate.

But two staunch opponents of the program -- Republican Sens. Terry Rice of Waldron and Alan Clark of Lonsdale -- were persuaded to vote for the appropriation. Rice and Clark said they figured that supporters of the program would get the required 27 votes for the appropriation after a May 22 special election to fill two of the vacant seats, so they voted for the appropriation, despite their misgivings about the program.

Arkansas Works -- known as the "private option" under former Gov. Mike Beebe, a Democrat -- has deeply divided Republicans, but recent changes made by Hutchinson's administration have made it more palatable to some GOP lawmakers.

On Monday, Seema Verma, administrator for the Centers for Medicare and Medicaid Services, announced that the federal government had granted a waiver allowing Arkansas to require some Arkansas Works enrollees to work, volunteer or attend job training in order to keep coverage.

The Arkansas Medicaid expansion program has operated under federal government waivers under the Patient Protection and Affordable Care Act. Democratic President Barack Obama signed the federal law in 2010.

Several representatives said Wednesday that the House had enough votes before Verma's announcement, but House Speaker Jeremy Gillam, R-Judsonia, said having the work requirement in hand certainly didn't hurt because it showed that the program was moving in a "responsible manner."

The Department of Human Services estimated that the work requirement would save $49.4 million in fiscal 2019, according to a document distributed by a department financial officer to other officials in January. The department provided the document to the Arkansas Democrat-Gazette last week in response to a request under the state Freedom of Information Act.

Department spokesman Amy Webb said in an email Wednesday that the projection assumed that the work requirement would take effect July 1 -- one month later than currently planned -- and that 20 percent of enrollees subject to it "would lose coverage for some period of time." She didn't have further details Wednesday on the number expected to lose coverage.

The savings estimate, which Webb called "old and inaccurate," did not account for administrative costs associated with implementing the requirement.

"This was a working assumption only," Webb said. "Now that we know when the work requirement will start, we will go back and review our assumptions and then do a financial analysis to determine what we think the financial impact of the work requirement will be."

Rep. David Meeks, R-Conway, has opposed Medicaid expansion from the start because of the program's increasing cost, but he voted for Wednesday's measure because he sees the program becoming more sustainable.

"The reason I voted for it now is because under the leadership of the governor and the Legislature, we've made positive changes to the program, especially the work requirement," Meeks said. "It's making it sustainable and keeping people accountable."

Meeks added that he's hopeful that the Centers for Medicare and Medicaid Services will approve another waiver requested by the state that would allow only those earning up to 100 percent of the federal poverty level to be eligible for Arkansas Works. The program currently allows earners up to 138 percent of the federal poverty level to enroll.

The spending authority granted to the Medical Services Division under SB30 includes $5.7 billion in federal revenue, $1.2 billion in state general revenue, $468 million in other revenue and $766 million in unfunded appropriations, Webb said Tuesday.

Rep. Dan Sullivan, R-Jonesboro, was one of 15 representatives who voted against the bill Wednesday. He's been one of the program's staunchest opponents, drafting a bill this session that would've capped the number of enrollees in the state's Medicaid program.

Sullivan said Wednesday that the work requirement is a "conservative" move in the right direction, but he's unsure that it will adequately control costs.

"There's still holes in the current system," he said.

Rep. Michael John Gray, D-Augusta, said a lot of people will point to the work requirement to explain why the measure sailed through the House, but he said most voted for SB30 because rural hospitals and health care providers rely on Arkansas Works.

"It's kind of funny; half that body got here by campaigning on [opposing] Medicaid expansion," he said.

Gillam, the House speaker, said Thursday that the "tenor" of the debate around Arkansas Works has changed, and he's hopeful that signals less angst around the program's spending authority in future years.

"I think this was the year we really kind of turned the corner on the debate," he said.

Information for this article was contributed by Andy Davis and Michael R. Wickline of the Arkansas Democrat-Gazette.

Calendar

The calendar of public events of the 91st General Assembly for today, the 25th day of the 2018 fiscal session.

COMMITTEES

10:30 a.m. House Management Committee, fourth-floor conference room. At the call of the chairmen, Joint Budget Committee, Room A, Multi-Agency Complex.

SENATE

11 a.m. Senate convenes.

HOUSE

11 a.m. House convenes.

A Section on 03/08/2018