The future of Medicaid looms in Arkansas with health care and budget implications for lawmakers and the new governor

Big factors affecting Arkansas’ Medicaid loom in the near future and this legislative session will require clear health care and fiscal policy direction from Gov. Sarah Sanders and the new GOP supermajority in the state capitol.

Sen. Missy Irvin, R-Mountain View, chair of the Senate Public Health Committee, discussed those fallout in her appearance on Capitol View this week.

For starters, the state’s healthcare system is shaky right now. Many hospitals, particularly in rural parts of the state, are in critical condition as pandemic-fighting funds dry up, but staff and supply costs remain extraordinarily expensive. Medicare and Medicaid federal reimbursement rates have remained unchanged for years, so much so that hospital officials argue Congress must approve higher rates in order to keep up with inflation and decades of rising costs or they will have no choice but to close.

“we [the state] It could change Medicaid rates, but not much,” Irvine said. “There was a rate review of that [former] Governor Hutchinson put him in his place by executive order, but that was methodical, and we’ve made some changes there. But in general, these are very restrained and locked up.

This spring, the end of the COVID-19 pandemic emergency declaration will signal a shift in policy that previously allowed states to automatically add Medicaid recipients. Arkansas (and other states) will “cancele” continued Medicaid enrollment. The move is expected to significantly reduce Medicaid listings of more than 1 million citizens. It would also reduce the federal Medicaid matching rate in Arkansas.

“We work on Medicaid under FMAP, which is the Federal Medical Assistance Program. And so that split between state share and state and federal revenue is about 70/30 — 70% federal, 30% state,” Irvin said. “Due to the public health emergency, this [fed contribution] It increased to about 77.51%. So every 1% swing is about $65 million in state general revenue. So you can see we actually save a lot of money because the federal government picks up more of the tab. This reduces dependence on state revenues. But once the public health emergency is over, that swing goes back to the 70/30% split versus the 77% we have now. So there’s a lot of financial ramifications for how that gets recorded and disposed of.”

Of the more than 1 million Arkansas enrolled in Medicaid, Irvin said, about 477,000 are children. Lawmakers will have to determine which aspect of health policy is where legitimate enrollees are directed and what the financial impact is. From the math Irvin shared, the state could be looking at hundreds of millions of dollars in public revenue.

Expansion of Medicaid—formerly Private Option and Arkansas Works, but now titled AR Home after changes made in the 2021 legislative session—will be another major hurdle for health care and financing in the 94th Arkansas General Assembly. Irvine said she did not have much dialogue with Governor Sanders on the matter because of the new governor’s focus on education and criminal justice reform. Sanders has not taken a consistent position for or against the current Medicaid expansion program.

But expanding Medicaid would need a three-quarters vote in both houses to be funded. It’s historically been built into the DHS’s overall budget, but lawmakers and former governor Asa Hutchinson always needed multiple attempts to get the 75% approval rating.

Irvin said the AR Home was “thoughtful and intentional” and working to improve health outcomes.

“It’s health care policy that has been lacking all this time to really improve health outcomes. If we don’t agree with health outcomes, we really need to shift gears, raise and shift them,” she said.

Irvin said parts of the reformed Medicaid expansion program help mothers, young children, veterans and those in nursing homes. Rolling back AR Home will cause huge holes in healthcare coverage across the state.

While Medicare services and coverage is the important goal, the financial impact of eliminating or canceling the AR Home Medicaid expansion program could leave a multibillion-dollar hole in the state budget. With traditional federal funding for Medicaid set to return from a pandemic level of 77% to 70%, the Medicaid expansion, under the Affordable Care Act, picks up 90% of the healthcare tab with Arkansas paying the remaining 10%. Reversing or discontinuing this program to traditional Medicaid could drop the federal contribution to the 70% level.

“It all works together,” Irvin said.

You can watch Senator Irvin’s full interview in the video below.

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