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Budget request falls $478M for Medicaid

Governor cites efforts to trim costs, rolls by Andy Davis | January 5, 2018 at 2:36 a.m. | Updated January 5, 2018 at 2:36 a.m.
Gov. Asa Hutchinson and state Department of Human Services Director Cindy Gillespie discuss shrinking Medicaid rolls and costs at a news conference Thursday at the state Capitol.

Thanks to efforts to reduce Arkansas' Medicaid spending and enrollment, Gov. Asa Hutchinson said, his request for federal and state funding for the program during the fiscal year that starts July 1 will be about $478 million lower than what he had first planned.

The reduction would bring the budget for the state Medicaid program in fiscal 2019 to about $7.5 billion -- about $55 million less than the state budgeted this fiscal year.

Compared with initial projections, the revised funding request for 2019 will include $423.1 million less in federal funds and $54.8 million less in state funds, including a $47 million reduction in requested general revenue. Individual income taxes and sales and use taxes are the two largest sources of state general revenue.

During a news conference Thursday, Hutchinson credited administrative efforts to contain spending, including by removing ineligible people from the state's Medicaid rolls and implementing changes recommended by a legislative task force in 2016.

Also, he said, "more people are working today than at any time in Arkansas history."

"When more people are working and moving up the economic ladder, then that means that more people are moving off of Medicaid," he said.

The funding request will be part of the proposed budget for fiscal 2019 that Hutchinson will present to the Legislature's Joint Budget Committee on Tuesday in preparation for this year's fiscal session, which starts Feb. 12.

Hutchinson said Thursday that the reduced Medicaid enrollment and projected costs should "be news that's well received by the Legislature."

He predicted the appropriation bill for the Medicaid program will receive the required three-fourths majority needed to pass each chamber.

"It gives them confidence in the reform efforts that they initiated that we're carrying out," he said.

In past sessions, winning support for the Medicaid appropriation bill has been difficult because of opposition from some lawmakers to the expansion of the program.

First approved by the Legislature in 2014, the Medicaid expansion, now known as Arkansas Works, extended eligibility to adults with incomes of up to 138 percent of the poverty level: $16,643 for an individual, for instance, or $33,948 for a family of four.

Last year, the Medicaid appropriation bill for fiscal 2018 failed twice in the Senate and once in the House before passing both chambers.

The funding request for fiscal 2019 doesn't include savings expected from a proposal to move about 60,000 people off the program by reducing the income cutoff to the poverty level and to impose a work requirement on many of those remaining on the program.

The state had planned for those changes to take effect Monday, but it had not received the required federal approval as of Thursday.

Hutchinson said he still expects the state's proposal to be approved, but acknowledged, "It will be granted in Washington's time frame, but not necessarily my time frame."

Even without the planned changes, he said, enrollment in the Medicaid program has fallen by 117,260 people since Jan. 1, 2017, to 931,006 as of Monday.

That included a drop in Arkansas Works enrollment of 58,725, to 285,564, and in the traditional Medicaid program of 58,535, to 645,442.

He said the reductions stemmed in part from an effort by the state Department of Human Services last year to remove people from the programs who were no longer eligible. That became more feasible after the department cleared out a backlog of overdue applications and other paperwork in 2016.

Senate President Pro Tempore Jonathan Dismang, R-Searcy, and House Speaker Jeremy Gillam, R-Judsonia, said reductions in enrollment and cost will likely help build support in their chambers for the Medicaid appropriation bill.

Last year, the Senate approved the measure with 27 votes, the minimum required in the 35-member chamber.

Since then, the Senate has lost two members. Greg Standridge, R-Russellville, died of cancer in November. He had supported funding for the Medicaid program but was undergoing treatment for his illness during much of last year's session and didn't vote on the appropriation bill.

Sen. Eddie Joe Williams, R-Cabot, who supported the appropriation last year, resigned in November to serve as President Donald Trump's representative to the Southern States Energy Board.

The special election to fill the seats is set for May 22, after the fiscal session has concluded. That means at least one senator who didn't support Medicaid funding last year will have to support it this year for the measure to pass.

Sen. Ronald Caldwell, R-Wynne, didn't vote on the appropriation last year, which has the same effect as a no vote, even though he had supported funding for Medicaid in the past.

He said Thursday that his lack of support last year stemmed in part from the Human Services Department's decision to award a contract for operating the state's youth lockups to an Indiana company instead of two Arkansas organizations that had managed them for more than 20 years.

The state later took over the lockups after the Legislative Council refused to approve the contract.

Caldwell also said he's concerned that some Medicaid recipients abuse the program.

He said he hasn't decided whether he'll vote on the appropriation bill this year.

"We've got to see the real numbers of what we're spending and how much money we have," he said.

The House lost one member in November when Rep. David Branscum, R-Marshall, resigned to be the U.S. Department of Agriculture's Rural Development director in Arkansas.

Branscum supported Medicaid funding last year, but his absence still leaves the chamber with 76 members who supported the Medicaid appropriation last year -- one vote more than required.

Gillam said the reductions in enrollment and projected spending go "a long way in showing that things are headed in the right direction."

"When you get numbers like what we've seen today, it has to quiet some of the concerns that we've had," he said.

But both he and Dismang said they don't yet know how support among lawmakers stands.

"The governor's made a lot of progress as far as verification of eligibility and some other concerns that members had in prior sessions," Dismang said. "I think that probably does impact the thought process for some of them."

A Section on 01/05/2018

Print Headline: Budget request falls $478M for Medicaid


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