Governor airs health plan

Fund private option through 2016, he asks

Gov. Asa Hutchinson speaks Thursday at UAMS, where he said he wants to see the state's private-option Medicaid expansion reauthorized through 2016.
Gov. Asa Hutchinson speaks Thursday at UAMS, where he said he wants to see the state's private-option Medicaid expansion reauthorized through 2016.

Gov. Asa Hutchinson called on the Legislature on Thursday to continue funding for the state's expanded Medicaid program through 2016 and to appoint a task force to develop an "alternative health coverage model" for "vulnerable populations" now covered under the program.

The task force's recommendations should include "a compassionate and reasonable and cost-effective response for care of those that are currently on the private option," as well as options to "modernize the entire Medicaid program currently serving the indigent, aged and disabled," Hutchinson said in a speech at the University of Arkansas for Medical Sciences in Little Rock.

The state expanded Medicaid primarily through coverage purchased on the state's health insurance exchange under the so-called private option.

The program has helped expand coverage and reduce the cost to hospitals to provide care for the uninsured, the governor said. But, he said, it has also become "politically toxic" and that legislators have legitimate questions about its cost.

"In regard to the private option, it is time to close this chapter and to start a new one," Hutchinson said. "It is a new day for health care in Arkansas, and I pledge to work with you to find the right solution for all Arkansans."

Later Thursday, Sen. Jim Hendren, R-Sulphur Springs, filed a bill that would create the task force, which would be made up of eight senators, eight representatives and Surgeon General Greg Bledsoe, who would be a nonvoting member.

After Thursday's speech, Hutchinson spokesman J.R. Davis said it's too early to say whether the replacement program would build on the private option or take a different approach.

In a news conference after the speech, Hutchinson said critics who might characterize his plan as a "rebranding" of the private option should consider his full remarks.

"This is a new chapter in health care in Arkansas," he said.

Hutchinson's proposal prompted at least a few lawmakers who have voted against funding the private option in the past to say that they'll vote to reauthorize it through Dec. 31, 2016.

Others said they need time to think over their positions.

Health care providers and advocates for the poor welcomed the news that the governor supported continued funding for the program through 2016.

"There's been a lot of misconceptions about the private option and Medicaid out there," said Bo Ryall, chief executive of the Arkansas Hospital Association.

He said he hoped the task force would help "answer a lot of questions that legislators have."

Authorized under the federal 2010 Patient Protection and Affordable Care Act and approved by the Legislature in 2013, the expansion of the state's Medicaid program extended eligibility to adults with incomes of up to 138 percent of the poverty level: $16,105 for an individual, for instance, or $32,913 for a family of four.

More than 223,000 newly eligible adults had been approved for coverage as of Nov. 30. That included more than 188,000 who were enrolled in private, Medicaid-funded plans on the exchange, more than 25,000 who were assigned to the traditional Medicaid program because they were considered to have exceptional health needs, and more than 10,000 who had not yet completed enrollment.

The federal government is expected to pay the full cost of covering the newly eligible population until 2017, when Arkansas must begin paying 5 percent of the cost. The state's share will then rise every year until it reaches 10 percent in fiscal 2020.

In making its recommendations, Hutchinson said the task force should consider options to apply for "block grant type waivers" that would give the state more flexibility to revamp its Medicaid program.

He also wants the task force to consider measures to strengthen employer-sponsored health insurance, move more people who receive government services into jobs, "increase accountability and personal responsibility for healthy behavior," and improve access to health care services in rural areas.

At the same time, Hutchinson said, the Department of Human Services will begin an assessment of options for overhauling Medicaid and using "private sector expertise" to reduce waste, fraud and abuse.

He said he wants the task force to issue a report by the end of this year.

"We will have a plan in place that assures the continuity of health care that is right for Arkansas, and a plan we can afford," Hutchinson said.

In a letter to Hutchinson on Thursday, U.S. Health and Human Services Secretary Sylvia Mathews Burwell, who met last week in Washington with Hutchinson and other state officials, called Arkansas "a national leader" and said federal officials are "eager to consider and work with you on additional changes and new ideas."

She called Hutchinson's objectives "reasonable and achievable," adding, "I can assure you of our openness to new ideas as you consider how to pursue those interests."

She added, however, that "there are significant savings and quality initiatives still available to the state, particularly with respect to high-cost, high-needs individuals who could best be served in the community as opposed to through more costly institutions."

That was an apparent reference to the Community First Choice Option, which allows states to receive enhanced Medicaid funding to provide in-home care to the elderly or disabled.

Arkansas Human Services Department officials said last year that they planned to seek legislators' approval during this year's session to implement that program.

Hutchinson, who took office last week, hadn't said before Thursday whether he supported continued funding for the private option.

Addressing a full auditorium at UAMS, he said he opposed the Affordable Care Act, but acknowledged, "Guess what, I lost that debate."

He applauded state lawmakers with crafting a program that uses "market principles." He credited the private option with increasing coverage among Arkansans, reducing the cost to hospitals for caring for the uninsured and bolstering the state budget by shifting more of the cost of the traditional Medicaid program to the federal government.

He noted that by fiscal 2020, Arkansas' share of funding for the program would amount to more than $221 million.

"That's about two $100 million prisons," he said, or equal to almost a third of the state tax dollars that support higher education.

Standing in front of a poster with a pie chart illustrating his point, he also noted that the state's share of spending for the traditional Medicaid program that same year would total more than $1.8 billion. The state generally pays 30 percent of the cost for traditional Medicaid, with the federal government paying the rest.

"If we're going to look at the future cost to this state, would it not be wise to consider the entire Medicaid cost?" he said.

He described a 44-year-old Morrilton woman who makes $8.65 an hour as a caregiver for the elderly, has high blood pressure and was uninsured for at least 10 years.

After gaining coverage through the private option, she visited the doctor and learned that she has diabetes, he said.

"Health insurance made a difference in her life," he said, and also likely saved money for state taxpayers by preventing her from having more costly health problems in the future.

At the same time, Hutchinson said, the private option has provided coverage to parolees, which is "a good thing, but not something we talked about and [were] aware of in the beginning."

The "unintended consequences" of the program have also included the elimination of some charitable efforts. For instance, he said the state didn't participate this year in Operation Walk, in which surgeons volunteer to provide free knee and hip replacements to needy patients.

Some say the change "takes the burden off of our medical professionals who are volunteering so much time," while others "worry about this shift to the government sector," Hutchinson said.

The private option has "divided our state and dominated our political debate," the governor said, noting that one of his nephews, Hendren, has opposed the program, while another, Sen. Jeremy Hutchinson, R-Little Rock, has supported it.

"The phrase 'private option' has become politically toxic, so much so that it's almost impossible to have a constructive conversation about health care reform in Arkansas without passions rising and folks taking sides," the governor said.

He wants to broaden the debate, he said.

"Let's remember what we're trying to do here, and that's to build a healthy Arkansas."

Sen. David Sanders, R-Little Rock, and a sponsor of the law creating the private option, said the law always was intended to be part of a broader set of changes.

Starting in 2017, the Affordable Care Act allows the U.S. Health and Human Services secretary to grant waivers allowing states to craft alternative approaches to providing coverage.

The alternative programs must provide coverage that's at least as comprehensive as that provided under the federal law and can't increase the deficit.

"If we had total flexibility, we probably would have designed it differently even from the get-go," Sanders said.

In addition to expanding coverage and helping hospitals financially, the private option has been credited by state officials with helping hold down premiums on the state's health insurance exchange.

Joe Thompson, director of the Arkansas Center for Health Improvement and the state's former surgeon general, said he hopes the task force will consider the effect the private option has had on the health care system in Arkansas and how it has fared compared with other states that did not expand Medicaid.

The first full report from a UAMS evaluation of the program isn't due until April 2016, but some components of it might be available to the task force, he said.

UAMS Chancellor Dan Rahn said he was "very enthusiastic" about the university being able to provide whatever assistance it can for the governor's plan.

He added that he liked the idea of looking at the entire spectrum and "continuing down the pathway of positive change in our health system that we've embarked on."

Information for this article was contributed by Michael R. Wickline and Aziza Musa of the Arkansas Democrat-Gazette.

A Section on 01/23/2015

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