LITTLE ROCK — It’s been a busy month for Arkansas health-care policymakers, politicians and advocates with skin in the Medicaid game as they weigh expanding the program.
And whatever Gov. Mike Beebe and lawmakers decide will affect Arkansas taxpayers.
Supporters of the expansion say it will save money for taxpayers — on the state level at least — through billions of dollars of new federal aid and decreased insurance premiums for those already covered.
Opponents say there is no such thing as free money and that federal deficits could trigger a drop in future fiscal help from Washington, D.C., putting the state in a fiscal bind.
At the end of June, the U.S. Supreme Court, in its landmark decision on President Barack Obama’s health-care law, allowed states to choose whether to expand their Medicaid programs to take in poor people who hadn’t previously qualified.
Arkansas, which previously had some of the nation’s strictest eligibility requirements, is now faced with a big political decision. Healthcare access for 250,000 uninsured people hangs in the balance.
Beebe has said he’s inclined to accept the increased federal aid, which will cover every dollar of the expansion for three years. The state share of the cost gradually rises to 10 percent by 2020.
Last week, the Department of Human Services estimated that state government would net $372 million in savings between 2014 and 2021 if it expands the program and accepts additional federal funds.
Beebe said he’ll make a decision by the end of this year. In January, when the Legislature convenes, lawmakers will face the choice of approving the federal money or not. Threequarters of members of the Senate and House will have to vote yes for the expansion to move forward.
“It’s a joint decision,” said Matt DeCample, Beebe’s spokesman.
Many state Republican lawmakers have said they’re opposed to the expansion. The big sticking points are suspicion over the state’s financial projections and an unwillingness to add to the federal deficit.
Rep. Nate Bell, a Mena Republican, said he thinks Beebe is playing politics with Medicaid.
“The governor wants to appear compassionate like ‘I want to help these folks.’ But really, it’s ‘I want to make the new Republican majority in the House look like hardhearted folks that don’t care about people,’” Bell said, adding that he expects the GOP to win a state House majority in November.
Bell said he’d vote against the expansion and thinks that most of his fellow House Republicans will, too.
Republicans can’t afford to pass on this opportunity, said Rich Huddleston, executive director of Arkansas Advocates for Children and Families, which has worked to improve health care for poor Arkansans.
“We firmly believe providing health coverage is the right thing to do for all Arkansas families. Second, the data clearly tells us that kids are far more likely to have health coverage if their parents have coverage,” Huddleston said.
Covering uninsured parents will further lower the state’s 7 percent rate of children without health coverage, he said.
Arkansas Medicaid Director Andy Allison, who is president of a national association of state Medicaid directors, said he has heard concerns from his colleagues that the federal government could change the current law, which requires Washington to pick up between 90 percent and 100 percent of the tab for the expansion between now and 2021.
That is part of what worries Bell and other Republicans.
“There’s an underlying premise that federal money is free money. But Arkansans pay federal taxes just like folks in other states do,” Bell said.
Concerns about a lack of doctors and other providers in the state have also surfaced. Seventy-four of the state’s 75 counties face some kind of provider shortage, said Dr. Joe Thompson, the state’s surgeon general.
Such concerns are valid, Thompson said, but the state is rapidly ramping up efforts to meet demand by implementing electronic records, creating financial incentives for doctors to collaborate more effectively and training nurse practitioners and physicians’ assistants.
“I think the solutions are a lot more within reach than [people] might think,” Thompson said. “We’re talking a 12-18 month set of opportunities,” he said. “Everybody’s anxious. The state had a huge problem to start with not having enough clinicians in the right places.”
Also in dispute is the economic effect that billions of federal dollars will have on the state.
The state Department of Human Services estimates that state tax revenue will increase by $255 million between 2014 and 2021 because of the increased income among providers. Allison said many of that tax revenue will originate from federal dollars rippling through the state’s economy.
“That’s a very conservative estimate,” Allison said. “The simple assumption here is that health care is dominantly local and so those Medicaid payments are going to end up in local hospitals and providers and eventually be taxed.”
The state estimate doesn’t include an analysis of how that money might “churn” or be spent several times.
“You pay your nurse, your nurse goes out and buys gas, the gas station goes [and buys something] and it continues,” said John Selig, Human Services Department director.
Bell counters with his observations about a European country, which has plunged deeper into a grinding recession after making austerity cuts in public spending, which had grown to dominate that nation’s economy, creating an unhealthy reliance on the public sector.
“Look at Greece. You cut government spending, and it hurts the economy because you’re so dependent on government spending. Without dispute, [Medicaid expansion] would dramatically increase spending and is going to be some level of boost to the economy. But it’s not close to what it would be if left to [the] private sector,” Bell said.
A 2010 study from the University of Arkansas’ Sam M. Walton School of Business estimated that current Medicaid spending generated $5.9 billion in total economic activity in the state in 2009.
The study found that 70,277 full-time jobs could be linked to Medicaid spending, and employee compensation linked to those jobs was $2.4 billion, according to the study.
If the state moves ahead, the expansion is estimated to create $827.5 million in new state and federal spending to cover the new enrollees per year. Currently, Medicaid has a $4.8 billion budget that serves 779,282 residents.
The federal government picks up 70 percent of the tab for current enrollees. That would stay the same, rising to 100 percent initially for those who would become eligible in the expansion.
State officials have raised the prospect with federal officials of requiring some modest co-payments from Medicaid recipients. Currently, only about 75,000 ARKids First-B children, whose parents make up to 200 percent of the poverty level, are required to pay a small percentage for their care.
The Department of Human Services says it is open to the idea, especially at a time when a state effort to restructure how it pays Medicaid providers is under way. The overhaul demands greater accountability and coordination among doctors and other providers as a way to cut waste and curb spending.
“We haven’t asked formally. I hear this every time I go talk to providers. We’re asking providers to share in their accountability. ... They very appropriately ask us what we can do to better engage patients in their own health and compliance with treatment, so that we all are sharing appropriately,” Allison said. “We’re listening, we’re hearing and we’re inclined to find ways to engage patients.”
But Selig cautioned that the state doesn’t want to stick doctors, hospitals and other providers with the bill if Medicaid patients don’t fork over cash — however, small — for their co-payments.
Still, Thompson said, it makes sense for Medicaid recipients “to have some financial skin in the game.”
Front Section, Pages 1 on 07/22/2012