Arkansas Officials: No Limit on Halting Private Option

LITTLE ROCK — The federal government cannot prevent Arkansas from ending a compromise Medicaid expansion that was approved last year and now is at risk of being defunded, state Human Services officials told lawmakers on Tuesday.

State Medicaid Director Andy Allison and DHS Chief Counsel Breck Hopkins told a legislative panel that the state didn't give up its authority on whether to continue the "private option" program that was approved last year. The private option was crafted as an alternative to expanding Medicaid under the federal health care law, with the state using federal Medicaid money to purchase private insurance for thousands of low-income residents.

"We did not give away nor could we give away any flexibility the state has to revoke that," Allison told members of the House and Senate Public Health, Welfare and Labor committees.

The plan is at risk of being defunded during the legislative session that begins Feb. 10 after losing two key votes in the state Senate. Continuing the program will require a three-fourths vote in the House and Senate. More than 79,000 people have enrolled in the program. Democratic Gov. Mike Beebe has warned that $89 million in his budget depends on savings expected from the private option cutting down on hospitals' uncompensated care costs.

Hopkins and Allison appeared before the panel to address questions raised by opponents of the private option about whether the federal waiver that allowed the expansion conflicted with the state law that authorized it. They have noted language in the waiver that would require several months to phase out the program.

Hopkins, however, said an accompanying state plan amendment supersedes the waiver and gives the state the ability to end the program without waiting several months.

"If the question is, can we end the private option? The answer is yes, by ending the state plan, which the state has the discretion to do, to eliminate the coverage for those adults up to 138 percent of poverty," Hopkins said. "If the state plan is amended to eliminate coverage for those individuals, the terms of the waiver become irrelevant."

An attorney for the Bureau of Legislative research told lawmakers in a separate memo that amending the state plan is the "simpler and more direct route" to ending the private option.

The U.S. Supreme Court decision that upheld the federal health overhaul also left it up to states to decide whether to expand Medicaid. That decision gives states flexibility on whether to continue the expansion later, Hopkins said.

"The state's option is not just to say yes," Hopkins said. "The state's option is also to say no."

But Edmund Haislmaier, senior research fellow with the conservative Heritage Foundation, suggested that those who were given expanded coverage could challenge the state's decision to drop them later.

"When a state adopts the Medicaid expansion, they're agreeing to what is currently under statute a mandatory population," Haislmaier said. "So if somebody was later removed because the state dropped the coverage, then they could go to court and say the statute says that this is mandatory that I be covered."

Allison later objected to that description, invoking a popular Eagles song.

"What the Supreme Court clearly did not say is that this becomes the Hotel California, and you can't get out," Allison said.

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