Gov. Mike Beebe earlier this month questioned whether the state’s Medicaid program needed a requested $90 million, according to an e-mail from a state finance administrator to Beebe staff members and to officials in the state Department of Human Services.
Beebe “wasn’t buying” the need for taxpayer funds to bolster the $5 billion program, according to a March 13 e-mail by Brandon Sharp.
The governor instead ordered Medicaid officials to “work him up something” to convince Republican legislative leaders that tax cuts would lead to cuts in Medicaid services, according to e-mails obtained by the Arkansas Democrat-Gazette.
“[Beebe] started questioning the need for the general revenue increases (90M in FY14/222M in FY15) based on all of the savings that had been reported to him,” wrote Sharp, a fiscal and budget administrator with the Department of Finance and Administration.
Sharp wrote that he, along with Beebe’s chief of staff, Morril Harriman, and deputy policy director Haley Keenan-Gray, tried to explain to the governor that the [$90 million] “didn’t come close to funding [the Human Services Department]’s original request,” but their arguments - at least at the time - failed to sway Beebe.
“He wasn’t buying it based on all of our conversations to date. He needs to show Legislative leadership that tax cuts would in fact result in program reductions. He asked me to get with ‘the Medicaid folks’ and work him up something that reflects the new reality based on the 3% growth you’ve been experiencing this year,” Sharp wrote.
Medicaid spending has been growing at about half the rate that it has in previous years, program officials have said.
Sharp’s e-mail was among 1,262 pages of e-mails, memos and other documents obtained under a state Freedom of Information Act request to the Human Services Department.
Beebe has said that Arkansas must meet its existing obligations - including Medicaid - before the state begins cutting taxes by as much as $100 million to $150 million, a political goal of the Legislature’s Republican majority.
Sen. David Sanders, a Little Rock Republican, said he and other party leaders knew that Beebe wanted to tamp down enthusiasm for GOP tax cuts.
“They were concerned when they heard the tax-cut number. I had specifically heard that they had been working on the Medicaid numbers,” said Sanders.
Republican tax cuts won’t affect Medicaid, Sanders said.
“We’ll take care of all of our responsibilities,” he said.
Political games with Medicaid weren’t being contemplated, said Matt De-Cample, Beebe’s spokesman.
“No, no. We’ve been straightforward from the outset. That $90 million has not moved,” DeCample said.
Beebe was just playing “devil’s advocate,” said De-Cample.
The governor was concerned that differing presentations of the Medicaid budget by the Finance and Administration Department and the Human Services Department would confuse lawmakers and encourage efforts to eliminate the $90 million in general revenuefor Medicaid from the budget, he said.
“It’s going to look like you don’t need the money,” DeCample said.
The confusion sprang from the finance agency’s focus on annual budgets as opposed to the Human Services Department’s longer-term budget planning. The two agencies don’t normally interact as much as they have with the Medicaid expansion issue, he said.
“We needed to make sure they were speaking the same financial language,” DeCample said.
The $90 million remains in Beebe’s budget, as do cuts and freezes in reimbursement rates to providers and other cost-saving measures.
The e-mails from Feb. 1 to March 21 reveal a wealth of details about strategic thinking among Beebe, his staff, the Human Services Department and exchange officials to push the state’s plan to expand Medicaid.
Beebe has proposed expanding Medicaid through the state’s health-insurance exchange, covering 250,000 poor Arkansans.
The idea was first floated by Republicans. President Barack Obama’s health-care overhaul, the Patient Protection and Affordable Care Act, calls for such exchanges, which would be marketplaces for private insurance, to be set up in each state.
The e-mails and other documents also reveal Obama administration officials’ irritation over Human Services Department chief John Selig’s comments to a national newspaper about the “private option” expansion plan - a deal reached between Beebe and federal officials in late February.
Beebe staff members encouraged the Human Services Department to share information with other states, including pro-expansion groups in Louisiana and state officials in Michigan and Oklahoma, the documents show.
Beebe isn’t trying to push the “private option” elsewhere, said DeCample. His administration is just trying to be helpful.
“It’s not that he’s actively campaigning for it in other states. He’s trying to get it done here,” DeCample said.
But comments made by Beebe administration officials appear to have rankled federal Medicaid officials.
“Andy, Did you you see the Washington Post article? Not helpful/accurate to have the decision characterized in this way. I’m sure that wasn’t your characterization, but we should talk how to address this,” wrote Cindy Mann, the director of the federal government’s Center for Medicaid and CHIP Services to state Medicaid Director Andy Allison on March 10.
A day earlier, the Post story quoted Selig saying, “There’s a feeling around here that if the private market can do something … we ought to let them and not create a larger government program. We feel like this is a very good deal.”
Allison responded quickly to Mann.
“We should talk next opportunity. Even before Thursday if we need to so I can be sure of key concerns. I haven’t done much press myself outside the state,” he wrote. “We have a brief summary in the works that I had hoped to get to you by now, and maybe it will help with messaging for all around.”
Allison and Mann have talked many times since that exchange, said Human Services Department spokesman Amy Webb. She didn’t know whether Mann objected to Selig’s quote or the general tone of the story, she said. Selig was the only Arkansas official quoted.
“This hasn’t been any kind of stumbling block,” Webb said Thursday.
As news of Arkansas’ unprecedented deal with the Obama administration spread, many health-care experts raised concerns that if other states follow Arkansas’ lead, it would lead to a heftier price-tag for the federal government - as much as 50 percent more expensive than just expanding the existing Medicaid program, according to a Congressional Budget Office report.
But in Arkansas, policymakers have pushed back hard against the Congressional Budget Office estimate, offering two much-lowercost estimates for the “private option” in little more than a week.
Last week, Human Services Department officials said the “private option” would only cost up to 14 percent more than traditional Medicaid expansion.
On Wednesday, Selig went further, saying a consultant’s study concluded that expanding Medicaidthrough the exchange would actually be cheaper than traditional expansion over a decade.
Arkansas’ approach has generated intense interest in several states that are either officially opposed to expanding Medicaid or remain undecided. Expanding the program is a key component of the Affordable Care Act, which the U.S. Supreme Court made optional for states in a ruling last year.
Farah Hanley, a Michigan state budget officer, queried Keenan-Gray in a March 20 e-mail about expanding Medicaid by skirting lawmakers’ approval.
The state could waive its fiduciary responsibility to receive federal money “so as to cut out the middle man [the state],” Hanley wrote.
“Where I’m going with this is the following: If the funds can go direct to the exchange, then the legislature doesn’t have to appropriate the funds and the program can be implemented,” Hanley wrote.
Keenan-Gray responded that Hanley’s idea was an “interesting thought,” and forwarded it to Allison, the state Medicaid director for Arkansas, who said it wasn’t likely to work.
“No grant to the state, no Medicaid, no matching funds, is the likely response from the feds,” Allison replied. “However this is certainly new and Michigan is certainly welcome to try. I completely understand their point.”
Under Arkansas’ plan, Medicaid would pay the premiums for private insurance plans purchased by those earning up to 138 percent of poverty, or $15,415 for an individual.
Beebe has consistently said that expansion can only proceed with the Legislature’s stamp of approval: 75 votes in the House and 27 in the Senate.
Other e-mails show aglimpse of “managing” public perceptions of how the “private option” will work. The state’s exchange planners have repeatedly said they hope Arkansas is selected to be one of 31 states to offer a federally managed insurance plan.
Such a plan would be offered statewide, easing fears by some advocates and lawmakers that certain rural, poor parts of Arkansas would remain outside the exchange.
But Tate Heuer, an aide to Arkansas’ U.S. Sen. Mark Pryor, contacted state Surgeon General Dr. Joe Thompson to warn against raising hopes among advocates that such a plan would be offered in the state.
The final federal rule on such plans “does not envision [the federal Office of Personnel Management] picking what states plans must be in on year one, and I don’t think anyone expects the agency to do that,” Heuer wrote on March 18.
“Understood,” Thompson replied. “We are managing a little pushback on the dominance of [Arkansas Blue Cross, Blue Shield] and pushed out the [multistate plans] as a potential safeguard.”
Beebe and Human Services Department leaders have said the success of the private option depends on more insurance carriers entering the state. Currently, Blue Cross, Blue Shield has a lion’s share of the Arkansas market.
About a month ago, “there was a concern that Blue Cross might be the only one and a concern about whether there would be statewide coverage adequate to support [expansion],” Thompson said Thursday. “Those concerns have been significantly diminished because of the interest expressed since then by four carriers and four stand-alone dental companies.”
With political momentum quickening in the past few weeks for legislative approval of expansion, an early February e-mail from Allison captures an earlier mood among policymakers.
Responding to an e-mail containing a Denver Post article that cited a state think tank’s analysis that expanding Medicaid would save lives in that state, Allison quipped: “Just imagine the headlines three years from now in a state that didn’t expand Medicaid.”
Front Section, Pages 1 on 03/29/2013