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Private option shaky after GOP blitz

by Michael R. Wickline, Spencer Willems, Claudia Lauer | November 6, 2014 at 4:41 a.m. | Updated November 6, 2014 at 4:41 a.m.

Correction: More than 180,000 Arkansans have been enrolled in private health insurance through the state's private option program, according to the Department of Human Services. An article in Thursday’s editions incorrectly stated the number of enrollees.

One day after a tidal wave of Republican candidates won election in Arkansas, legislative leaders are saying the state's private-option Medicaid expansion program will have to change dramatically if supporters want it to survive.

And Democratic Gov. Mike Beebe said Wednesday that the program faces a serious challenge from the slew of newly elected lawmakers who ran campaigns promising to dismantle it.

Republicans picked up two more seats in the Arkansas Senate, beating Democrats in all four contested elections. And in the House, Republicans gained a net of 13 seats, increasing their majority from 51 to 64 out of 100 seats.

Voters rejected many candidates who supported the private option.

And since it takes a three-fourths legislative supermajority to continue the program, it will be hard for private-option supporters to win when the Legislature convenes early next year.

Sen. Jonathan Dismang, R-Searcy, one of three key legislative architects of the program, said he's not sure what the health insurance program could look like in the future.

"In its current form, I don't believe there is any way it survives," he said.

The private option, which uses federal Medicaid dollars to provide private health insurance for more than 200,000 poor Arkansans, has received unanimous support from Democrats since its creation in 2013. But the issue has divided Republican lawmakers, with some fiercely opposing the program, arguing that it will be financially unsustainable after federal financial support is reduced.

As it stands, the program extends insurance coverage to adults with incomes of up to 138 percent of the poverty level -- $16,105 for an individual or $32,913 for a family of four.

If the program is discontinued, supporters argue that the state will be left with a $100 million hole in the budget, because several tax breaks were approved with the assumption that the extra federal Medicaid dollars would be flowing into the state.

Federal dollars pay 100 percent of the private option until fiscal 2017, when the state will pick up 5 percent of the cost. The state's share ultimately will be 10 percent starting in fiscal 2020.

Supporters also argue that it will be expensive to transition private-option enrollees off of the plans or to provide them with alternative coverage. And once the program's over, they argue that the number of sick and uninsured Arkansans requiring emergency medical assistance will spike, resulting in more uncompensated care at hospitals statewide.

State Department of Human Services officials have warned that without the program, some rural hospitals will face deficits and others may close; federal Medicare reimbursement rates have been cut, so these hospitals are increasingly reliant on the private-option funds. The Legislature is scheduled to hear financial impact reports from those hospitals in coming months.

Rep. Ken Bragg, R-Sheridan, the House majority leader, said early Wednesday that he hadn't polled the newly elected House members, but he knew some had campaigned specifically against the private option.

"I think we're going to have some challenges," he said. "A lot of them were campaigning against the private option, but they didn't have the real benefit of sitting in the session and hearing the information that many of us heard. We always said we're going to evaluate it, and that there might be some adjustments to it. But it's hard to speculate until we really sit down and talk to people."

The Democrats lost seats Tuesday night but are holding on to slim leads of less than 70 votes in two races. Neither race had been officially declared as of late Wednesday.

The House minority leader, Rep. Eddie Armstrong, D-North Little Rock, said Wednesday that he believed the private option played a large role in his party's losses Tuesday night.

"I think the private option is still strong; I know people actively campaigned on this issue up and down the ticket on the Republican side of the aisle," he said. "It was framed in a way by some of our colleagues as the end-all-be-all of wedge issues."

Armstrong called on the newly elected Republicans to work with supporters to try to find a compromise to continue the program.

"I would challenge them to think about the ... Arkansans that now benefit from what the Democrats and Republicans worked toward to make law for our people," he said. "It's something that we should look at as an opportunity to survey what is best for the people of Arkansas ... financially, socially, spiritually, however way you can package it."

Because a supermajority is needed for passage, supporters have always struggled to round up enough votes.

In 2013, the 35-member Senate passed it 28-to-7, one more vote than the minimum needed to secure passage. Earlier this year, it passed with no votes to spare, 27-8.

In 2013, the 100-member House passed it 77-to-23, two votes above the minimum. Earlier this year, supporters had to vote five times before enough House members could be persuaded to fund the program for another year, with a final vote of 76-24. Some of those members, who won re-election Tuesday, said during this year's session that they would re-evaluate whether to support the program next year based on the financial effect of the program.

Beebe said Wednesday that the program has "got a serious problem."

"It is going to have huge effects on hospitals if they don't do it. Some will close," Beebe said.

He said the private option means roughly $28 million for the University of Arkansas for Medical Sciences, and without that funding the hospital could face "major cuts, layoffs."

"It will have an impact on the budget because [the Legislature is] not going to repeal the $100 million tax cut, and the tax cut was created and occasioned and possible because of the private option; that money has got to come from somewhere," Beebe said.

The program will survive only if the newly elected Republican governor fights to save it, Beebe said.

"Based upon what happened, Gov. [Asa] Hutchinson is going to have his work cut out for him trying to salvage the private option," he said.

Many newly elected legislators said Wednesday that they wanted to wait to get more information before deciding whether to continue the program. Several, however, said the program would need to be changed in order to gain their votes.

Michelle Gray, a Republican from Melbourne who unseated Rep. Tommy Wren, D-Melbourne, on Tuesday night, said that 90 percent to 95 percent of the people she talked to during her campaign were worried about how the program was affecting Arkansas.

"It's just not sustainable as it is right now," she said. "My management style is I'm always open to suggestion. I think there is some tweaking that could be done."

Others said they wanted the program eliminated immediately.

Dave Wallace, a Republican business owner in Leachville, said he's worried about the private option and, as it stands, he wouldn't support reauthorizing it.

Wallace beat Democratic incumbent Wes Wagner of Manila, who supported the measure. Wallace said that voters in his district were very critical of the program as well as the Affordable Care Act, which provided the federal funds to pay for it.

"It's kind of one of those programs that you see when you buy a used car; you buy it now and you pay for it later," he said. "I truly believe it will result in one of the highest tax increases -- either directly or indirectly -- in Arkansas if we don't repeal it. I'm convinced of it."

Several of the newly elected senators also committed to voting against the program.

Democratic state Rep. James McLean of Batesville lost Tuesday to former Rep. Linda Collins-Smith of Pocahontas in a race for the Senate seat held by Sen. David Wyatt, D-Batesville.

McLean, who voted to create the private option, said, "I'm not very optimistic about its future. It will be very very difficult to reauthorize it and keep it. But who knows. They might be able to come up with a compromise plan."

Collins-Smith couldn't be reached for comment Wednesday. But during her campaign, Collins-Smith said the private option "is taking people who are able-bodied and putting them on Medicaid," and its "cost is just out of control."

"I would vote to end it. No matter what you call it, it is Obamacare," she said.

A section on 11/06/2014

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