It’s the Moment of Truth for One State’s Grand Obamacare Bargain

Arkansas struck a major Medicaid expansion compromise in 2013, but the political coalition behind it is fraying.

MIAMI, FL - SEPTEMBER 20: Deborah Dion (L), Hattie Coleman and other protesters gather in the office of Florida State Rep. Manny Diaz as they protest his stance against the expansion of healthcare coverage on September 20, 2013 in Miami, Florida. As the protest took place, the Republican led House in Washington, D.C. by a 230-189 tally passed a short-term government spending plan that would eliminate all funding for 'Obamacare.' The Florida State government is also working against the Affordable Care Act by refusing to set up its own health care exchanges and they also have highlighted concerns about the navigators, federally funded workers who will help enroll people in health plans. (Photo by Joe Raedle/Getty Images)
National Journal
Sophie Novack
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Sophie Novack
Feb. 18, 2014, midnight

Arkan­sas’s grand health care ex­per­i­ment is on the rocks.

It was less than a year ago that a Demo­crat­ic gov­ernor and a Re­pub­lic­an Le­gis­lature passed a com­prom­ise to ex­pand their state’s Medi­caid pro­gram.

But now, just as the Arkan­sas law is start­ing to take ef­fect, some Re­pub­lic­an le­gis­lat­ors are think­ing they might take it back. And if they do fold it en­tirely, the nearly 100,000 low-in­come res­id­ents who’ve already signed on to the pro­gram may find them­selves once again un­in­sured.

At is­sue is Arkan­sas’s “private op­tion,” a plan that would use fed­er­al fund­ing to provide health cov­er­age to the state’s low-in­come res­id­ents.

The pro­gram is a ver­sion of the Medi­caid ex­pan­sion con­tained in the Af­ford­able Care Act, which of­fers fund­ing to states to ex­pand the pro­gram to cov­er all res­id­ents whose in­comes put them be­low 138 per­cent of the fed­er­al poverty line.

Arkan­sas’s ex­pan­sion, however, con­tains a wrinkle: In­stead of us­ing the funds to en­roll res­id­ents in Medi­caid, the state is tak­ing the fed­er­al money and us­ing it to help res­id­ents buy in­sur­ance on the state’s new in­sur­ance ex­change.

The plan was in­ten­ded as both a policy in­nov­a­tion — the state is hop­ing it will be both more cost-ef­fect­ive than Medi­caid and will de­liv­er bet­ter res­ults — and a polit­ic­al com­prom­ise. Demo­crats wanted the ex­pan­sion to bur­geon the so­cial safety net in a state whose Medi­caid pro­gram was pre­vi­ously among the coun­try’s most re­strict­ive, but many Re­pub­lic­ans were wary of ex­pand­ing an en­ti­tle­ment pro­gram that they see as costly and in­ef­fect­ive.

Obama­care man­dates that the fed­er­al gov­ern­ment pick up nearly all the costs of the ex­pan­sion, and the lure of fed­er­al fund­ing was strong.

Arkan­sas is not a wealthy state: The 2012 census found nearly 19 per­cent of state res­id­ents meet the fed­er­al stand­ard for im­pov­er­ished. Nor is it a par­tic­u­larly healthy one: The state ranked 44th out of 50 states in life ex­pect­ancy, ac­cord­ing to the Kais­er Fam­ily Found­a­tion’s 2010 as­sess­ment.

And so, in Septem­ber, Demo­crat­ic Gov. Mike Bee­bee struck a deal with Re­pub­lic­ans co­di­fy­ing the state’s “private op­tion” Medi­caid ex­pan­sion. Through a waiver, the Obama ad­min­is­tra­tion gran­ted the state per­mis­sion to ex­per­i­ment with their share of fed­er­al fund­ing, un­der the con­di­tion that the pro­gram would cost both the fed­er­al gov­ern­ment and the new be­ne­fi­ciar­ies the same as the tra­di­tion­al Medi­caid pro­gram, and that cov­er­age would be equi­val­ent.

Arkan­sas has in­flu­enced oth­er states to at­tempt a sim­il­ar private mod­el. Iowa’s waiver has been ap­proved, Pennsylvania is ex­pec­ted to sub­mit its own to the ad­min­is­tra­tion shortly, and New Hamp­shire and Utah are both con­sid­er­ing their own ver­sions of the ap­proach.

En­roll­ment began in Oc­to­ber, and thus far more than 96,000 Arkansans have signed up. The state es­tim­ates that between 200,000 and 250,000 people are eli­gible.

But though the law is up and run­ning, the polit­ic­al pact that cre­ated it was hardly carved in stone.

The state law only fun­ded the pro­gram through June 30 of this year. To keep it go­ing, the Le­gis­lature has to vote an­nu­ally to re­new the fund­ing. If they don’t, pro­gram par­ti­cipants will lose their in­sur­ance cov­er­age start­ing Ju­ly 1.

The House is vot­ing this week on a fund­ing bill for the state’s health de­part­ment that would in­clude ex­tend­ing fin­an­cing for the private op­tion, but its pas­sage is far from guar­an­teed.

Some Re­pub­lic­ans are with­hold­ing their sup­port, ar­guing against fur­ther spend­ing, and they re­main res­ol­utely op­posed to any pro­gram that is im­pli­citly linked to Obama­care. Oth­ers op­pose the private op­tion but do not want to hold up the full ap­pro­pri­ations bill. In­stead, they sup­port amend­ments that would dam­age the pro­gram without re­vok­ing core fund­ing.

“The votes are al­most cer­tainly there to not pass the private op­tion. The votes are al­most cer­tainly not there to pass a budget bill without the private op­tion. That’s an im­passe, folks,” said Re­pub­lic­an state Rep. Nate Bell last week, ac­cord­ing to the Arkan­sas Times. “Do we want to be­come D.C.?”

Bell voted against the private op­tion last year and in­tends to fight it in 2015. For now though, he sup­ports pas­sage of the fund­ing bill, as long as it in­cludes lan­guage he ad­ded that is in­ten­ded to harm the pro­gram.

“I didn’t vote for this pro­gram ori­gin­ally, I don’t like it; I want it to go away,” he said. “I would love to see the pro­gram fail. I do want a con­trolled fail­ure.”

Fund­ing for the pro­gram is fur­ther com­plic­ated by the high bar the state sets for spend­ing bills. To be ad­op­ted, the meas­ure needs to pass with more than three-fourths of the vote in both cham­bers.

In 2013, that wasn’t easy. Demo­crats backed the meas­ure, but Re­pub­lic­ans were split on it, and in the end it passed only nar­rowly. The meas­ure needed 75 votes in the House and got 77. In the Sen­ate, it needed 27 and got 28.

Again fa­cing a chal­lenge, the amended bill passed the budget com­mit­tee last week and is sched­uled for a vote in the House on Tues­day.

It re­mains to be seen wheth­er Bee­bee and his fel­low Demo­crats can get enough Re­pub­lic­ans to back the pro­gram this time around. The resig­na­tion and re­place­ment of one Demo­crat­ic sup­port­er of the private op­tion by a Re­pub­lic­an op­pon­ent in a Sen­ate spe­cial elec­tion last month, plus the pos­sible flip in the vote of at least one oth­er Re­pub­lic­an sen­at­or, has threatened to de­rail the pro­gram. There were nine sen­at­ors op­posed to the bill at last count, just enough to keep it from passing.

A bright spot for the bill is that House Speak­er Davy Carter, a Re­pub­lic­an, says the spend­ing meas­ure needs to move to keep the gov­ern­ment from fall­ing in­to a shut­down, and says he’ll make the cham­ber vote as many times as needed to get it through. If and when the bill passes in the House, it will be sent to the Sen­ate, pos­sibly as soon as this week.

But pass or fail, the House bill in cur­rent form already wounds the pro­gram. Bell’s amend­ment would pro­hib­it state spend­ing on out­reach or pro­mo­tion of any part of the health care law — not just the private op­tion. A second amend­ment would im­pose more re­strict­ive re­quire­ments for fed­er­al waivers for the pro­gram.

Demo­crat­ic sup­port­ers are not pleased with the pro­posed changes go­ing in­to this week, but — fa­cing the pro­spect of watch­ing 100,000 in­di­vidu­als lose their health care cov­er­age — they’re thus far will­ing to stom­ach le­gis­la­tion mak­ing it more dif­fi­cult to reach po­ten­tial fu­ture en­rollees.

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