Shrinking Medicaid enrollment lowers state budget projection by $47 million, governor says

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Brian Chilson

GOVERNOR HUTCHINSON AND DHS DIRECTOR CINDY GILLESPIE


On Thursday, Governor Hutchinson announced that enrollment in Arkansas’s Medicaid program has declined by almost 10 percent over the last year — from 1,048,000 on Jan. 1, 2017, to 931,000 on Jan. 1, 2018.

The decrease in the number of beneficiaries, coupled with other Medicaid reforms undertaken at the Arkansas Department of Human Services, is expected to significantly reduce the projected cost of the program in the coming fiscal year, Hutchinson said.

"DHS is now projecting that it will spend roughly half a billion dollars less on Medicaid in [fiscal year 2019] than was anticipated last year,” Hutchinson said.

That number includes both federal funds — which account for the lion’s share of Medicaid spending — and state general revenue. The DHS budget request for FY 2019 will require $47 million less in state general revenue than the $1.3 billion that has previously been projected for that year. The decrease in projected federal spending will be around $423.1 million.

The Medicaid program in Arkansas includes many populations of beneficiaries, including children covered by ARKids, low-income adults in the Arkansas Works program, elderly people in nursing homes and the developmentally or physically disabled.

Arkansas Works is the state’s approach to the Medicaid expansion created by the Affordable Care Act; the other Medicaid populations are considered “traditional Medicaid.”

The governor said the decreased enrollment included a reduction of about 58,000 in traditional Medicaid and 58,000 in the expansion population. At the beginning of 2017, there were 344,289 Arkansas Works beneficiaries. On Jan. 1 of this year, there were 285,564, he said.

“That is a significant, significant difference from where we were before. That is a 10 percent reduction,” Hutchinson said. “[That] is good news, without any question, for Arkansas taxpayers … and also a good indication that those on Medicaid are moving up the economic ladder.”

It is not clear how many of those beneficiaries have gone on to receive insurance coverage from a different source — such as through an employer or through the purchase of an individual plan on the health insurance marketplace — and how many may have lost health coverage altogether.

Hutchinson said the reduction in enrollment was partly due to an “extraordinary effort by DHS in improving the accuracy of the Medicaid rolls” in terms of reviewing cases. With DHS Director Cindy Gillespie by his side, he also praised the agency for processing new cases in a more timely manner and sharing income information with the Department of Workforce Services, thereby "ensuring that those that are on Medicaid are actually supposed to be there.”

He also pointed to Arkansas’s historically low unemployment rate. “More people are working today than at any time in Arkansas history … and that means more people are moving off of Medicaid,” he said.

Hutchinson said all 300,000-plus Arkansas Works enrollees were referred to the Department of Workforce Services to get help finding work. About 16,000 of those individuals accessed services from the agency after the referral, and about 4,000 reported finding a new job afterward.

The governor hopes to expand beyond work referrals to require that some Arkansas Works enrollees have a job. Doing so would require a waiver from the federal government, which the Trump administration previously has seemed to signal it would grant. Now, however, Arkansas’s waiver request — which was submitted over the summer — appears to be in limbo. Hutchinson and Gillespie had hoped to implement work requirements and other major changes to Arkansas Works by Jan. 1.

Nonetheless, Hutchinson said he remains optimistic the Trump administration will grant his waiver. “It will be granted in Washington’s time frame, but not necessarily my time frame,” he said.

"We are one of eight states that have a request in for a work requirement,” Gillespie added. “[We are] feeling very good about all of us getting our waivers.”

Hutchinson said that not all of the reduced projected costs were the result of decreased enrollment. He cited additional “savings that are being created by the transformation efforts being undertaken at the Department of Human Services,” such as changes to the Medicaid pharmacy program. The state is on track to create savings of $835 million over five years in traditional Medicaid, he said, a goal that he set in 2015.

The governor insisted that these savings weren’t resulting in decreased quality of service for beneficiaries.

"This is not a circumstance in which the half a billion in reduced spending on Medicaid comes at the expense of Medicaid recipients,” he said. "This is meeting their needs in a consistent fashion. It is a matter of accurately controlling those who are eligible for Medicaid [and] making sure the system works for everybody.”

Next month, during the state legislature’s fiscal session, Hutchinson will attempt to convince conservative skeptics within his own party to reauthorize Medicaid expansion for another year. Because the Arkansas Works appropriation requires a three-fourths supermajority vote, the governor must win over some lawmakers reluctant to re-approve funding for a program made possible by Obamacare.

The governor plans to cite the reduced spending projections and enrollment numbers as evidence that he can deliver on his promise to rein in costs.

“With bending the cost curve, with rolling off 115,000 people from the Medicaid rolls, I think this is news that … will be well-received by the legislature. … They’re rightfully concerned about the state budget numbers and the Medicaid growth and this should give them a higher level of confidence that this trend will continue,” he said.

This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans. Find out more at arknews.org.

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