The Arkansas Department of Human Services is bracing for the economic fallout of the COVID-19 crisis, as state officials anticipate that a rapidly increasing number of Arkansans will rely on the state’s social safety net programs in the coming months.
More than 150,000 unemployment claims have been filed in Arkansas since March 7, with many sectors of the state’s economy fully or partially shut down to attempt to stop the spread of the virus. State officials now expect ripple effects on programs such as the Supplemental Nutrition Assistance Program and Medicaid. The DHS forecasts that increases in Medicaid enrollment due to COVID-19 will cost the state roughly an additional $200 million over the next 15 months (SNAP is fully federally funded).
To prepare for the expected flood of applications, the DHS has re-assigned and trained 100 workers from other divisions within the agency to take applications over the phone, with another 70 being trained. “As the safety net agency, processing SNAP and Medicaid applications is among our most essential functions,” DHS spokeswoman Amy Webb said.
Enrollment has already begun to soar in SNAP, the federally funded, state-administered food stamp program for low-income Arkansans. In February, the state received a little more than 21,000 SNAP applications, a fairly typical monthly number. In March, the state received 39,205 applications; in the period from April 1-10 alone, it received 19,652. (By comparison, in March of last year, the state received 25,198 applications; in April of last year it received 28,121.)
State officials expect a dramatic increase in Medicaid enrollment as well. In addition to covering health care services for certain medically vulnerable populations, including aged, disabled and blind people, Medicaid also has income-based programs that offer health insurance for low-income Arkansans. For example, the Arkansas Works program, the state’s unique version of Medicaid expansion, covers adults who make less than 138 percent of the federal poverty level (that’s around $17,000 for an individual or around $35,500 for a family of four). The DHS projects that enrollment in Arkansas Works will swell by 40 percent over the course of the next four months, from around 250,000 on April 1 to around 350,000 by August. The agency then forecasts net enrollment to steadily decline from that peak, falling around 2,500 per month through June of next year. That assumes an economic recovery by the end of the summer; if the economy continues to struggle longer than that, higher enrollment — and the accompanying increased costs — could continue as well. Even with the eventual enrollment declines projected by the DHS, the agency’s forecast still leaves Arkansas Works enrollment in June 2021 around 30 percent higher than when the public health emergency was declared in March 2020.
Officials said that the Arkansas Works program will likely see the steepest increase, but other income-based Medicaid programs are likely to see additional enrollment as well — including ARKids, which covers low-income children, as well as programs that cover very poor parents, and low-income pregnant women not otherwise covered by Arkansas Works. The DHS did not have a specific projection for an increase in enrollment in such programs.
In addition to new applications, Medicaid enrollment will also grow because the state is now removing fewer people from the program. Typically, the state terminates coverage for more than 20,000 Medicaid recipients each month, but it has recently relaxed certain rules during the pandemic. The agency last month suspended its normal policy of terminating coverage if mail sent by the DHS was returned with a bad address, the beneficiary failed to reply to a request for information in time, or the beneficiary failed to cooperate with child support enforcement. The state reinstated more than 11,000 people who lost coverage at the end of March for one of those reasons. Under further guidance from the federal government, the state will now also maintain coverage for anyone enrolled in the program as of March 18, even if a change in the beneficiary’s circumstances such as increased income would normally lead to a termination. The only exceptions are for beneficiaries who voluntarily leave the program, move out of state, die or are incarcerated.
The state will bear a portion of the cost for the increased Medicaid enrollment, but this will be partially offset by an increase in the federal Medicaid funding that states receive. The federal government pays for most of the costs of Medicaid programs through match rates that vary depending on a state’s financial situation. For example, in Arkansas, the state typically pays around 29 percent of the cost of the traditional Medicaid program, with the federal government “matching” to pay just over 71 percent. Those match rates will increase for the duration of the COVID-19 public health emergency as part of the federal Families First Coronavirus Response Act, signed into law by President Trump on March 18. Match rates for most of the traditional Medicaid program will increase by 6.2 percentage points, with the federal government now picking up 71.42 percent of the tab; the match rate for ARKids will bump up 4.3 percentage points to 95.83 percent. In its budget for the coming fiscal year, the DHS forecasts that these enhanced match rates, which are retroactive to Jan. 1, 2020, will end by December.
Arkansas Works, the program in which the state expects the biggest enrollment bump, will remain at the same match rate, with the federal government paying for 90 percent and the state on the hook for the remaining 10 percent.
The DHS projects that for the last quarter of fiscal year 2020, which runs through the end of June, the impacts of increased Medicaid enrollment will lead to an additional $180 million in spending, inclusive of both federal and state dollars. For state fiscal year 2021, the DHS forecasts an additional $735 million in Medicaid spending attributable to the pandemic-related enrollment increases. That bump brings the total projected federal and state Medicaid spending in Arkansas for next fiscal year to just over $9 billion. The state legislature approved that appropriation Thursday. The DHS did not provide a specific breakdown of how much of these additional costs would come from state spending, but using the agency’s estimated breakdown of federal and state spending for next fiscal year, that amounts to roughly $39 million in additional state spending this fiscal year and $161 million next fiscal year.
In addition to re-allocating staffing to take applications, the DHS is also making efforts to streamline the enrollment process to encourage social distancing and process applications as quickly as possible. Webb said that the agency is encouraging people to apply online. “We’ve seen that number go up to about 50 percent of our applications in the last week,” she said. The agency has also increased its capacity to receive applications by phone. Up to 170 re-assigned staffers will be available to take applications by phone in the coming weeks, and the agency has purchased additional laptops and headsets to allow them to work from home. People can apply online at access.arkansas.gov or by phone at 1-855-372-1084; people can also apply by mail or in person at a county office (all county offices remain open).
The state has also received waivers from the federal Food and Nutrition Service to further streamline the process for SNAP applications. During the public health emergency, the DHS will be able to take applications by phone using an attested signature rather than requiring that the signature be turned in, and the agency will no longer require a household to complete an eligibility interview prior to approval, provided that the applicant’s identity has been verified and other mandated verifications have been completed. These changes have expedited the process and reduced face-to-face contact, state officials said.
This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans.