Big factors affecting Arkansas’ Medicaid program will emerge in the near future, and this legislative session will require clarity on health care and fiscal policy direction from Gov. Sarah Sanders and the new Republican majority in the state Capitol.
Sen. Missy Irwin (R-Mountain View), chair of the Senate Public Health Committee, discussed the fallout on this week’s Capitol View show.
First, the state’s health care system is currently fragile. Many hospitals, especially in rural parts of the state, are in critical condition as pandemic funding dries up, but staffing and supplies remain costly. Medicare and Medicaid reimbursement rates have stayed the same for years, so much so that hospital administrators have argued that Congress must approve higher rates to keep pace with inflation and decades-long cost increases, or they have nothing else to do. Select, only close.
“us [the state] Medicaid rates can be changed, but not by much,” Irving said. “There’s a rate review that shows [former] Governor Hutchinson implemented it by executive order, but it was systemic and we made some changes there. But overall, these are pretty tight and locked down. “
This spring, the end of the COVID-19 pandemic emergency declaration will mark a shift from a policy that previously allowed states to automatically add Medicaid recipients. Arkansas (and other states) will “eliminate” continuous Medicaid enrollment. The move is expected to significantly reduce Medicaid coverage for more than 1 million citizens. It would also reduce the federal match rate for Medicaid in Arkansas.
“We operate in Medicaid under FMAP, the federal medical assistance program. So the state share, state revenue and federal revenue is about 70/30—70% federal, 30% state,” Irvin said. “Due to the public health emergency, [fed contribution] rose to about 77.51%. Therefore, each 1% fluctuation is equivalent to $65 million in total state revenue. So you can see we’re actually saving a lot of money because the federal government is covering more of the cost. This reduces dependence on state revenue. But once the public health emergency is over, that swings back to a 70/30 percent split, and we’re at 77 percent now. So that has a lot of implications financially on how we register and unwind it. “
Of the more than 1 million Arkansans enrolled in Medicaid, about 477,000 are children, Owen said. Lawmakers will have to figure out where legal registrants on health policy will be directed and what the fiscal implications will be. Based on the math Irvin shared, the state could receive hundreds of millions of dollars in general revenue.
Medicaid expansion — formerly Private Option and the Arkansas Works Program, but now called AR Home after changes made in the 2021 legislative session — will be another major health care and funding component of the 94th Arkansas General Assembly obstacle. Owen said she had not had many conversations with Sanders on the issue as the new governor focused on education and criminal justice reform. Sanders did not take a firm stance for or against the current Medicaid expansion plan.
But expanding Medicaid requires a three-quarters vote in both chambers to be funded. It has historically been included in the overall budget of the Department of Human Services, but it always took several attempts by lawmaker and former Gov. Asa Hutchinson to get 75 percent to pass.
Irvin says AR Home has been “deliberate and conscious” and is improving health outcomes.
“There has been a lack of health care policy that actually improves health outcomes. If we don’t sanction health outcomes, then we really need to shift gears, turn it up and change it,” she said.
Part of the overhauled Medicaid program is helping young mothers and children, veterans and people in foster care, Owen said. Removing AR Home would leave a huge hole in health care coverage across the state.
While health care delivery and coverage are important goals, the fiscal impact of dropping or retiring the AR family Medicaid program could leave a multibillion-dollar hole in the state budget. With traditional Medicaid federal funding set to return to 70% from pandemic levels of 77%, under the Affordable Care Act, Expanded Medicaid would cover 90% of health care costs, with Arkansas paying the remaining 10%. Reversing or shutting down the program to traditional Medicaid could bring the federal contribution down to 70%.
“It all works together,” Owen said.
You can watch Senator Irwin’s full interview in the video below.
