Medicaid bill adds veto bait, goes to Senate

The Arkansas Legislature's Joint Budget Committee on Tuesday advanced a bill authorizing the use of federal funds for the state's version of Medicaid expansion, after adding an amendment that would eliminate the expansion by year's end -- a step that Gov. Asa Hutchinson promised to veto.

The appropriation bill is Senate Bill 121, which would grant the state Department of Human Services' Medical Services Division $8.4 billion in spending authority, including $1.7 billion for the Medicaid expansion, during fiscal 2017, which starts July 1.

In a voice vote, the committee sent the bill to the 35-member Senate, where Senate President Pro Tempore Jonathan Dismang, R-Searcy, said he believes that at least the required 27 senators will vote to approve it. Appropriation bills require a three-fourths vote for approval.

The Joint Budget Committee voted 41-11 to tack on an amendment, proposed by Senate Republican leader Jim Hendren of Sulphur Springs, that would "sunset," or end, the Arkansas Works program on Dec. 31, 2016, rather than Dec. 31, 2021.

The amendment replaces an earlier proposal, also by Hendren, that would have barred spending on the Medicaid expansion. The new amendment has the same aim as the old one -- to reduce opposition in the Senate to the bill, even with the understanding that Hutchinson will veto that language if the bill reaches his desk.

The sunset amendment also includes a severability provision so that if any provisions or applications of the bill are ruled invalid by a judge, such a ruling won't affect the other provisions or applications of the bill.

Earlier this month, the Legislature passed a measure in a special session to make changes in the Medicaid expansion and rename it as Arkansas Works. Hutchinson, who is Hendren's uncle, said Hendren's latest amendment "makes sense," is in line with his line-item veto strategy to continue funding for the Medicaid expansion and minimizes any legal challenges.

"The other good thing about it is that this [has] really brought us together -- both Democrats and Republicans -- as we sought this solution," the Republican governor told reporters. "This really reflects the best of the legislative process, where we don't reject good ideas, we embrace good ideas."

Thirteen Republican senators and eight Democratic senators voted for Hendren's latest amendment in the committee, while five Republican senators voted against it. Eleven Republican representatives and nine Democratic representatives voted for the proposal, while six Republican representatives voted against it.

After the committee's meeting, Sen. Bobby Pierce, D-Sheridan, said he voted for the amendment because "it's a whole lot different from what we had [last Thursday].

"It's down to this. We either spend three more weeks or four more weeks up here arguing over it and fighting over it, or we get it done right now and save the taxpayer money on it," he said.

Hendren's latest amendment emerged Tuesday, five days after the budget committee balked Thursday at his earlier amendment to SB121 to bar spending on the Medicaid expansion. Most Republicans voted for the earlier amendment, but Democrats largely voted against it. Just before that attempt to amend the bill in committee Thursday, 10 Republican senators voted against SB121 in the Senate, and the bill fell two votes short of the 27 required for approval.

Two of those 10 Republican senators voted for Hendren's latest amendment. They are Sens. Bart Hester of Cave Springs and Missy Irvin of Mountain View.

The Medicaid expansion, enacted by the Legislature in 2013, extended coverage to adults with incomes of up to 138 percent of the poverty level: $16,394 for an individual, for instance, or $33,534 for a family of four. Most of the 267,000 people covered receive the coverage through what is known as the private option, which uses Medicaid funds to buy private insurance coverage.

The Arkansas Works legislation approved in the special session makes changes that Hutchinson has said would encourage enrollees to stay employed and take responsibility for their health care.

The Medicaid expansion has been fully funded by the federal government since it started in 2014. The state will begin paying 5 percent of the cost starting Jan. 1, and its share will gradually increase up to 10 percent by 2020. The state funds to match the federal funds will be $43 million in fiscal 2017, a state spokesman has said.

Hendren told the Joint Budget Committee, "If we do not pass an appropriation for the Department of Human Services, we will have failed in in our fundamental jobs down here as legislators," and this amendment "will give us the ability to do that.

"We know that if we fail, 270,000 are going to lose their insurance," he said. "We know that if we fail, a billion dollars a year in the next five years is going to be pulled out of Arkansas' health care system. We know that if we fail, our budgets are going to have some real challenges ahead."

Rep. Charlotte Douglas, R-Alma, who voted against Hendren's amendment and opposes the Medicaid expansion, countered by asking, "When we go back to our districts and explain this [line-item veto strategy], are we doing this to honor the people of Arkansas and their confidence in the system and in us?

"I think that we are overlooking an important piece of the equation here. We do not honor the people of Arkansas and what they think should go on up here, the integrity, the ethics and how they feel like business should be conducted," she said.

But Sen. Jeremy Hutchinson, R-Little Rock, who is Hutchinson's other nephew in the Senate, responded that Arkansans granted the governor the constitutional authority to issue line-item vetoes of appropriations bills.

"Nobody is doing anything underhanded or with a lack of integrity," he said. "Both sides have every right to vote how they vote, and both sides have every right to use the tools which the people gave them in our constitution."

Hutchinson said he challenges Douglas' suggestion that "somehow by the governor exercising his discretion given to him by the people, who passed the constitution, that something nefarious is going on here."

Sen. Alan Clark, R-Lonsdale, who voted against the amendment and opposes the Medicaid expansion, said that "it is historic that the Arkansas Legislature is giving as much power as they can to the executive branch.

"You will regret it, whether you are a Republican and a Democrat," he said.

Sen. Jason Rapert, R-Bigelow, said he withdrew his proposed amendment to SB121 after Gov. Hutchinson wrote in a letter to him that his administration would pursue a waiver from the U.S. Department of Health and Human Services to eliminate coverage for emergency contraceptives.

"As a result of our discussion, my administration will contact Secretary [Sylvia] Burwell in Washington, D.C., to request in writing the process under which the state of Arkansas can waive the requirement to cover these drugs for our state's expanded Medicaid populations," Hutchinson wrote in his letter dated Tuesday to Rapert.

"Specifically, I request that Secretary Burwell lay out what options the state has to waive the required emergency contraceptive coverage for the expansion population, including those who are receiving coverage through an alternative benefit plan or QHPs [qualified health plans]," he wrote.

Hutchinson has warned that failing to reauthorize the Medicaid expansion would create a "hole" of more than $100 million in the state budget and would lead him not to call a special session on his plan to increase state highway funding in order to get additional federal highway funds that the state is eligible to receive.

Hutchinson has proposed a $5.33 billion general-revenue budget in fiscal 2017, which would be a $142.7 million increase over fiscal 2016. It factors in a nearly $101 million cut in individual income tax rates enacted by 2015 Legislature.

Information for this article was contributed by Brian Fanney of the Arkansas Democrat-Gazette.

A Section on 04/20/2016