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Arkansas: GOP pushing Medicaid expansion in the exact wrong direction.

(sigh) Over at the Arkansas Times, healthcare reporter extraordinaire David Ramsey has the skinny on the latest mucking around with ACA Medicaid expansion being attempted by GOP Gov. Asa Hutchinson and the state Republican leadership:

The feds would have to approve the state's waiver proposal in order to enact the governor's plan, but the feds will only move forward if legislation is already in place. That's the reason for the special session: The governor will ask the legislature to pass laws granting him the authority to seek the waiver and his plan will be spelled out, in broad terms, in legislative language in these laws. Most expect that the governor will be able to get legislative approval relatively easily (he needs a simple majority). Note that some of the fine print will still have to wait for the state's actual waiver proposal and the terms and conditions if the Trump administration grants the waiver.

Here are some of the changes that Hutchinson will be pushing in the special session:

  • Some form of work requirements for beneficiaries. This was a line in the sand for the Obama administration but Team Trump appears ready to allow it. Lots of questions about the details here: What will be the punitive measure if beneficiaries fail to comply? What if any exemptions will be available for those who are medically frail, caretaking for a family member, etc? What job placement or job training resources will be available? What will be verification process? What happens to beneficiaries who seek a job and are unable to find one?

Yeah, yeah, yeah...now that Trump has the wheel, every Republican legislature/governor is acting out their Work Requirement fetish, in spite of the fact that 87% of Medicaid expansion enrollees work already and this type of requirement is a royal pain in the ass to administer (eating up most/all of the savings they supposedly achieve in administrative overhead). What else do they have?

  • Moving beneficiaries who make more the federal poverty level to the Obamacare marketplaces. Currently, the Medicaid expansion covers adults who make less than 138 percent of the federal poverty level (that's about $16,000 for an individual or $33,000 for a family of four). Hutchinson is proposing to move those who make more than the poverty line — around $12,000 for an individual or $24,000 for a family of four — from the private option over to the Obamcare exchange, the regulated and subsidized marketplace where consumers can purchase health insurance. Obviously this plan relies on the continued existence of Obamacare! The folks that make between 100-138 percent of FPL would shop for plans on the marketplace. Those plans would be subsidized but it would still mean beneficiaries had to pay small premiums set at 2 percent of their income (while "Arkansas Works" currently does include small premiums for this population, beneficiaries don't lose coverage if they fail to pay; under this new plan, if they couldn't keep up with payments, they would lose their insurance).

This, ironically, would be the exact opposite of the situation that Andrew Sprung and I addressed nearly two years ago in the nonexpansion states, when we both pointed out that there's currently around 1.9 mlllion people on exchange policies who are in the 100-138% FPL income range who would be shifted over to Medicaid if those states were to expand the program under the ACA.

There's around 330,000 Arkansans enrolled in the state's "Private Option" variant of ACA Medicaid expansion...which basically means that instead of being enrolled in Medicaid itself, they're already enrolled in private ACA exchange policies anyway. The difference is that the funding for this is split 90/10 between the federal government and the state, with the enrollees themselves not really having to pay much of anything. According to Ramsey, around 60,000 of these enrollees are in the 100-138% range. "Officially" kicking them over to exchange plans (presumably the exact same ones they're in now?) would mean the feds would be covering nearly 100% of the cost, with the enrollees covering a tiny portion of it (2% of their income as noted above). The point of all this is to get the state out of having to cover the remaining 10%. Assuming all 60,000 made the move, it would also nearly double Arkansas' exchange tally from around 70,000 to 130,000 enrollees.

Normally, increasing the ACA exchange numbers would be a good thing since it's supposed to improve the risk pool. However, this particular population is very likely to make that pool worse since lower-income folks tend to be more expensive to treat. Then again, in the case of Arkansas, they're already enrolled in the same exchange policies anyway, so I'm not sure this would be a factor.

In any event, as Ramsey notes:

While this all sounds technical, it could have major policy implications: it would save a lot of money for the state, but it would cost more for the federal government, particularly if other states started down this path — and it would impose more costs on low-income beneficiaries. It would also be a major undertaking in terms of coordination and outreach for an administration with little interest in either when it comes to the Medicaid population. If the state forces a sudden turnover of 60,000 Arkansans, the chances of many current beneficiaries getting lost in the shuffle and ending up without coverage would be high.

The irony here is that if this was one of the 19 NON-expansion states, this would probably be seen as good news, if only from a "half a loaf" POV; those caught in the Medicaid Gap would finally be eligible, while those in the 100-138% range at least wouldn't be any worse off than they are at the moment. In fact, that population would be exactly where they are now in those 19 states: Eligible for highly-subsidized exchange plans but not for Medicaid itself.

The danger, as noted by several people on Twitter and by Ramsey himself above, is that if this goes through, there's a strong likelihood of other states which have already expanded Medicaid going this route as well to avoid paying for some of the 5-10% of the treatment costs for this group of Medicaid enrollees. It wouldn't be devastating, but it would be a step in the wrong direction...although it would also mean shifting more of the funding side of Medicaid from the state to the federal government which, ironically, I'm generally in favor of.