Health care policy impacts millions of Americans, including the more than 300,000 Arkansans currently covered by the state’s Medicaid expansion program. The details, however, can get confusing quickly, and it seems like every month lawmakers propose to shift the policy ground beneath our feet.
The Arkansas Legislature met in a special session earlier this month to approve Gov. Asa Hutchinson’s plan to alter the state’s Medicaid expansion, adding work requirements and cutting eligibility. That plan now awaits approval from the federal government. The same day the governor signed that bill into law, the U.S. House passed the American Health Care Act, which would completely undercut the governor’s proposal and threaten the very existence of Medicaid expansion in Arkansas. It’s now in the Senate, awaiting a vote.
The Medicaid expansion helped cut the state’s uninsured rate in half. What would the proposed changes coming from the governor and Republicans in Congress mean for those who rely on that coverage? Let’s take a look.
What is the Medicaid expansion? What is Arkansas Works?
The Affordable Care Act (often called Obamacare) provided funding to cover low-income adults under the Medicaid program. This expansion of Medicaid covers people who make less than 138 percent of the federal poverty level — that’s $16,400 for an individual or $33,600 for a family of four. The U.S. Supreme Court ruled in 2012 that states could choose whether or not they wanted to accept the Medicaid expansion. Arkansas decided to move forward, but with a twist: The state obtained a special waiver from the federal government to use Medicaid funds to purchase private health insurance for the Medicaid expansion population, a policy that became known as the private option. Later, when Hutchinson became governor and continued the policy, he re-branded it as Arkansas Works. Whatever name it goes by — Medicaid expansion, private option, Arkansas Works — the program covers more than 300,000 Arkansans, with most of the costs covered by the federal government through the ACA.
How will Hutchinson’s proposed alterations to the Medicaid expansion change who is eligible?
Hutchinson, with the Legislature’s backing, is seeking permission from the federal government to limit eligibility for Arkansas Works to households at or below the federal poverty line (that’s $11,880 for an individual or $24,300 for a family of four). That would mean that current beneficiaries who make between 100-138 percent of the FPL — more than 60,000 of the state’s working poor — would be removed from the program.
Assuming the ACA remains in place, what options will those cut from coverage under the governor’s plan have for health insurance?
Most of the 60,000 people who would lose Arkansas Works coverage would be eligible for the ACA’s Health Insurance Marketplace, often called the exchange, where they can buy subsidized health insurance. The ACA provides income-based premium tax credits and cost-sharing reduction subsidies that keep premiums, co-pays and deductibles relatively low.
Others will not be able to get subsidized coverage on the exchange, because their employers offer them health insurance (the state Department of Human Services estimates this applies to 20 percent of the beneficiaries in the 100-138 FPL group). If that employer-sponsored insurance (ESI) meets two tests — it’s considered “affordable” under the law and meets a “minimum value” standard in terms of coverage — then they will be barred from getting the premium credits and cost-sharing reductions that would make coverage on the exchange affordable for them. Those who fall into this category and only have ESI as an option would typically face higher costs and receive less generous coverage.
Will the working poor have to pay more under the governor’s plan? What will change in terms of the number of people insured and the quality of coverage they receive?
The governor has claimed that the 60,000 people being removed from the Medicaid rolls “will not lose access to coverage” and would get “the same level of financial support that they have now.” In fact, those beneficiaries would pay more than they do today — sometimes much more — and many would have skimpier coverage. It is likely that these proposed changes would increase the state’s uninsured rate.
Currently, the state charges a flat rate of $13 per month to Arkansas Works beneficiaries who make between 100-138 percent of the FPL. Medicaid rules impose a strict limit on the total amount that beneficiaries can be charged between premiums and cost-sharing (it cannot exceed 5 percent of monthly or quarterly income). Today, if people are unable to pay their premiums, they don’t lose their coverage; they incur a debt to the state, which Arkansas is unlikely to collect unless the individual has a state tax refund from which to withhold.
People moved to the exchange under the governor’s plan would pay premiums equivalent to around 2 percent of household income. Depending on an individual’s situation, that would mean an increase of at least 50 percent in monthly premiums, with others facing spikes of fourfold or more. The most dramatic increase likely would be borne by those who have to move to ESI plans, which can charge premiums of up to 9.69 percent of household income. A single mother of three living at the poverty line who now pays a flat $13 premium for Arkansas Works coverage could face a premium of up to $195 if moved onto employer-sponsored coverage.
Those moved to the exchange would get plans that have a similar amount of coverage relative to the plans provided through Arkansas Works, though with less generous out-of-pocket limits. Things look much worse for those who would be routed to ESI plans instead: A work-sponsored plan only has to cover 60 percent of average expected costs, as opposed to 94 percent under Arkansas Works. That could mean $5,000 deductibles or $7,000 out-of-pocket maximums, expenses that many people in this income range could not realistically afford to pay.
Unlike with Arkansas Works, if people do not (or cannot) pay their premiums on the exchange, they would have their coverage terminated and become uninsured for the remainder of the year. Currently, only 25 percent of these Arkansas Works beneficiaries are paying the $13 premiums each month. If they struggle to keep up with premiums on the exchange, they’ll end up without coverage.
All of this means some of the 60,000 beneficiaries in question would likely lose coverage in the transition. “Our greatest concern is that tens of thousands of Arkansans will become uninsured because they are no longer eligible for Arkansas Works, unable to afford other coverage, or simply fall through the cracks because of the constant policy changes,” Marquita Little, of Arkansas Advocates for Children and Families, said. (Arkansas Advocates for Children and Families has provided donations to the Arkansas Nonprofit News Network.)
What happens if Donald Trump and the Republican Congress repeals the ACA and replaces it with the American Health Care Act (AHCA)?
If the AHCA becomes federal law, it would unravel Arkansas Works, as well as Hutchinson’s plan for Arkansas Works 2.0:
The Medicaid expansion would be completely phased out by eliminating an enhanced federal match rate for new enrollees starting in 2020. Without that federal funding, Arkansas could not realistically continue to offer Medicaid coverage for the population of low-income Arkansans reliant on Arkansas Works, now numbering more than 300,000 beneficiaries. Forget about Arkansas Works 2.0; Arkansas Works itself would be dead.
AHCA would also undermine Hutchinson’s plan because of the way it changes the subsidies on the exchanges. Hutchinson’s plan presupposes that the 100-138 percent of FPL population can rely on those subsidies, which ensure that the amount people are charged for premiums on the exchange does not exceed 2 percent of income. The AHCA has no such limit, and its tax credits aren’t based on income; it also would allow insurance companies to charge higher amounts based on age than the ACA does today. The Arkansas Works beneficiaries that Hutchinson aims to send to the exchange would encounter impossibly high premiums if the AHCA passed in its current form, especially if they are older. The Congressional Budget Office found that the average monthly premium faced by an individual who is 21 years old would be $120 under the AHCA; at 40 years old, $200; at 64 years old, $1,216.
Hutchinson acknowledged this problem. “The governor would like to see the AHCA’s tax credits increase for the lower income populations to account for this issue and ensure there are affordable coverage options available outside of Medicaid,” his spokesman J.R. Davis said.
The AHCA would eliminate the ACA’s cost-sharing reductions, which offer cost protections from co-pays and deductibles to low-income consumers. Under the ACA, someone who was sent to the exchange as part of Hutchinson’s plan would face an average deductible across eligible plans of $246 and an average out-of-pocket maximum of $661. Under the AHCA, cost-sharing would skyrocket, with deductibles for those same plans ranging from around $1,500 to $3,500 and the out-of-pocket maximum ranging from around $3,600 to $7,150.
What other effects would the AHCA have on Arkansas health care?
The AHCA would also enact hundreds of millions of dollars in cuts to the state’s traditional Medicaid program, which covers the elderly in nursing homes, low-income children, very poor parents, the blind, the disabled and other vulnerable populations. Such cuts would force the state to cut services or eligibility for traditional Medicaid, or find new revenue to make up for the loss.
(This analysis is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans.)
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