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Arkansas Governor: Time Running Out for Medicaid Expansion

By Marissa Evans, CQ Roll Call

February 19, 2016 -- Arkansas Gov. Asa Hutchinson accused the Obama administration of inflexibility in its negotiations with the state over his proposal for an alternative approach to Medicaid expansion under the 2010 health care law, and he warned that the existing program may be allowed to expire at the end of the year if an agreement is not reached by April.

The Republican governor, in Washington for a gathering of the National Governors Association, said at a news conference that his administration's negotiations with the Department of Health and Human Services (HHS) for waivers to permit federal funding for his planned "Arkansas Works" alternative have not been going well. The program needs the waivers to allow provisions that require unemployed beneficiaries to be referred to job training programs and working beneficiaries to enroll in employer-sponsored plans. It would replace the expiring Medicaid expansion effort the state launched in 2014.

"This administration is not interested in a change in behavior [for beneficiaries], they simply want to provide the Medicaid benefits," Hutchinson said. "I'm interested in helping to encourage different behaviors."

Under the Affordable Care Act, state Medicaid programs could be expanded to include low-income enrollees who make up to 138 percent of the federal poverty line. The cost is 100 percent covered by the federal government until 2017, when states must take on a portion of the cost that will grow to 10 percent by 2020. Thirty-one states and the District of Columbia are participating in the expansion.

HHS Secretary Sylvia Burwell wrote in a Feb. 16 letter to Hutchinson that while his goals for the program are "quite innovative," some of them "push the bounds of what is allowed under Medicaid law" and could negatively affect beneficiaries. The Obama administration has thwarted states' efforts in the past to set work requirements as a condition of being in the program.

"With respect to your interest in incentivizing work, we agree with you that increasing employment in the state is an important state and federal objective," Burwell wrote. "We would like to work with you to identify potential solutions to support this goal, consistent with Medicaid's role as a health coverage program."

Burwell also wrote in her letter that she is committed to continuing a discussion about how to make job training and employment opportunities more attractive to beneficiaries.

Since inheriting the Medicaid expansion effort from his predecessor, Hutchinson has been pushing for an overhaul that he says would help move beneficiaries out of the program so they could afford to pay for health insurance themselves, and subsequently save the state millions of dollars. But, he said, ending the expansion program altogether would put a $100 million hole in the state budget. Hutchinson said he wants to secure the waivers before he presents his new plan to the legislature in April during a special session.

"To continue our Medicaid expansion, we need not only these reforms but we need a financial path to make sure we're not draining money from general revenues in terms of education and other essential needs of the state," Hutchinson said.

Arkansas' existing expansion program buys private health insurance for residents who qualify for Medicaid.

Hutchinson said that the proposed program's provision to require working people who qualify for Medicaid to sign up for employer-sponsored plans would save the state $29 million per year.

But timing is also an issue for Arkansas. The waivers the state is pursuing allow exceptions from the normal Medicaid expansion requirements set by HHS. Another type of waiver that gives states even greater flexibility have not been sought by Arkansas because, Hutchinson said, they don't "seem to be a priority" for the outgoing Obama administration.

"I see Medicaid expansion as a tool to move people up the economic ladder, and there's a lot of things you can do to encourage that worker training, to instill work as opportunities as the fabric of the program," Hutchinson said. "This administration can't do that because it's an entitlement. Once you qualify, you got it and you cannot put constraints on that."

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