The 2016 fiscal session began at noon today and, as expected, the battle continues over the re-authorization of the Medicaid expansion program “Arkansas Works,” formerly known as the private option.
The outlook is not nearly as promising as it was a year ago.
In the 2015 regular legislative session, the Gov. Asa Hutchinson was able to convince the general assembly to continue the private option while the Health Reform Legislative Task Force re-examined the program and made recommendations for a replacement. Legislators also passed Act 46, which provides that the private option as we have known it will end on Dec. 31.
The task force took the challenge seriously, conducting a wide-ranging, in-depth analysis of potential health care reforms over a year of frequent meetings. The recommendations ultimately included an endorsement of the governor’s reforms to the private option, which would be restructured as Arkansas Works.
But the task force ended its mission last month in a divisive stand-off over managed care in the traditional Medicaid program. The governor had publicly announced his plan to use savings from managed care to help pay the state’s cost for Arkansas Works. But the task force was nearly evenly divided over two opposing plans for doing so.
This disagreement led to the governor removing his managed care legislation from the call for last week’s special session. This also means that the savings from managed care — projected to be between $1.057 billion to $1.439 billion over five years — will be addressed at some later date, rather than factored into the budget now.
Now, as the fiscal session begins, the focus has been sharpened to one single point — the 75 House votes and 27 Senate votes that are necessary to pass the appropriation bill to fund Arkansas Works. Insiders believe that there are sufficient votes in the House to pass the appropriation, but that it is very likely to be still one or possibly two votes short in the Senate.
It is unknown whether the governor and the leadership will be able to persuade two more senators to change their votes. Most — if not all — of the senators opposing the program are believed to be immovable “no” votes. Only Sen. Missy Irvin, R-Mountain View, has not firmly and publicly stated her intention to vote no. But, even with her vote, the count would still be one vote short of passage.
There is no question that if Arkansas Works is not passed before the new fiscal year begins on July 1, the effect on state and local government will be substantial. The task force’s consultant, The Stephen Group, estimated in March that the private option’s impact on the state budget in 2017 would be $206 million dollars.
To begin drawing a clearer picture of the impact, the House leadership released an alternative budget earlier this week that incorporates the cuts that would be necessary without Arkansas Works. The budget prepared by House Speaker Jeremy Gillam, R-Judsonia, and Joint Budget chair Rep. Lane Jean, R-Magnolia, estimates the shortfall to be less, but still a very substantial $142.7 million dollar cut from the state’s $5.3 billion budget.
The speaker’s budget would slice 3 to 5 percent from nearly every area of state government, meaning services would be widely affected. It includes cuts of $30 million from non-legally mandated education funding, $10.9 million from DHS’ Children and Family Services, $7.4 million from the Department of Corrections, $1.1 million from county funding (which includes reimbursement for housing state prisoners in county jails), $881,163 from city funding, $1.9 million from State Police and a huge chunk from the already-declining funding for higher education: $15 million from 4 year schools (excluding UAMS) and $4.3 million from two-year schools.
UAMS would endure the same 3 percent cut but receive an additional $17.2 million to help cover all of the newly-uncompensated care it would provide.
Rather than release an entire alternative budget, the governor has focused on detailing the effect of these cuts to specific areas of government.
For example, according to the governor, the $10.9 million the speaker’s budget would cut from Children and Family Services would mean eliminating 255 jobs, which would take average caseloads from 29 cases to 48 cases per caseworker. Yesterday, the governor announced at a news conference that without Arkansas Works, it would no longer be possible to meet the state’s required match to receive $200 million in federal highway funding.
As the fiscal session continues, we are likely to hear more from the governor on the cuts we can expect in state services. We may perhaps see other alternative budgets using figures closer to The Stephen Group’s $206 million estimated shortfall with even deeper cuts. We may also hear of additional reforms to Arkansas Works in order to gain the necessary Senate support.
What seems certain, however, is that even if the appropriation passes this time, the re-authorization vote will continue to be an annual battle for the life of this program.
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Erika Gee, an attorney of counsel with the Wright Lindsey & Jennings law firm in Little Rock, represents clients in government relations, regulatory and compliance matters. Email her at EGee@WLJ.com. |
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