Yesterday, newly-inaugurated Arkansas Governor Asa Hutchinson announced that the state’s pioneering alternative Medicaid expansion model would be phased out by December 2016. Arkansas’s plan was adopted in 2013 in a proposal by then-Governor Mike Beebe, who brokered a compromise with the new Republican legislature to expand their bare bones program. The alternative approach uses Medicaid funds to pay for private exchange-based coverage for the newly eligible up to 138% of poverty, and has added more than 200,000 individuals to the rolls, resulting in the largest uninsured rate drop among all states last year, from 22.5% in 2013 to 12.4%. Last year the expansion was narrowly renewed by the legislature after five attempts, which requires a three-fourths vote for passage.
Following the November 2014 elections, Republicans now control 64 seats of the 100-member House and 23 seats of the 35-member Senate, in addition to the governorship. Altogether there are 39 new legislators; many of them ran on repeal of the Medicaid expansion. The result of the elections effectively signaled that the current Medicaid alternative in the state would cease to exist, with Governor Hutchinson announcing yesterday, “With regard to the private option, it is time to close this chapter and start a new one.” The current program is set to expire at the end of 2015, although the governor pledged to keep it in place through December 31, 2016. But to do that, it will again need to be reauthorized by a three-fourths majority in both chambers, which may be difficult given the wave of newly elected legislators opposed to the program as-is.
The biggest issue for the existing program among Republicans has been with unemployed enrollees. A report last year by State Senator Bryan King found that more than 80,000 beneficiaries (40% of enrollees) had no income. The compromise negotiated between the governor’s office and legislators following the November elections calls for a task force to recommend ways to comprehensively reform the state’s Medicaid program, including creating incentives to work and for beneficiaries to pursue preventive care.
If no agreements are made on finding a way to continue some form of an expansion, Arkansas could become the first state to nullify its Medicaid expansion, which could also discourage other states that looked to it as a model for a bipartisan compromise. The Medicaid expansion provides for a 100% match in federal funds for the newly eligible through December 2016, at which point the rate gradually reduces to a permanent match of 90% by 2020.