In State of the State, Mike Beebe Urges GOP-Led Legislature to Expand Medicaid

LITTLE ROCK - Gov. Mike Beebe urged skeptical Republicans to not sacrifice Arkansas' share of federal dollars by rejecting an expansion of its Medicaid program, saying in his final "state of the state" address Tuesday that doing so would jeopardize the health of their neighbors back home.

The GOP controls the Arkansas House and Senate for the first time since Reconstruction and legislative leaders have refused to embrace an expansion of the Medicaid program under the new federal health care plan. Beebe supports the move, saying it would save the state money by cutting down the costs Arkansas hospitals face for treating patients without insurance.

(Video: Click here to see video of Beebe's complete speech. And click here to read the transcript.)

"We balance our budgets and we don't need to sacrifice our share of federal money to other states," said Beebe, a Democrat who is barred by term limits from seeking re-election next year. "Refusing money to help our people may make a statement to the federal government, but it will cost us more at home and jeopardize the health of our fellow Arkansans and won't solve the problems of our national counterparts."

State budget officials had projected a $138 million shortfall in Medicaid funding in the next fiscal year but Beebe said Tuesday that the number is now "more manageable" and would allow the state to avoid a proposal to cut some nursing home care to help make up the deficit.

"It appears we will avoid the most painful of these cuts, including the Level 3 nursing home care provided to thousands of elderly Arkansans. Those of you who provided leadership in the House and the Senate, together with our office, are of one mind that the last thing we'll ever do is throw folks out of nursing homes," Beebe said.

A spokeswoman for the Department of Human Services later said officials expect to lower the projected shortfall in the next two weeks because Medicaid's costs this year have been slower than expected. DHS spokeswoman Amy Webb said the department believed it could avoid the nursing home cuts and hoped to also avoid proposals to eliminate adult non-emergency dental care and a health insurance program for low-income workers.

As expected, Beebe used the 26-minute speech to focus on his push for expanding Medicaid's eligibility under the federal health care law, which calls for the federal government to pay the full tab for the Medicaid expansion when it begins in 2014. After three years, states must pay a gradually increasing share that tops out at 10 percent of the cost. The U.S. Supreme Court in June upheld most of the health care law, but justices said the federal government could not take away states' existing federal Medicaid dollars if they refused to expand.

The governor said that under the current health care system, all Arkansans are already spending part of their pay on benefits for others, whether they realize it or not.

"We have the opportunity before us to ease that pressure for both our hospitals and ourselves," Beebe said. "If you already have private health insurance, you're paying a tax that was never approved by any government or by our citizens. It's the hidden tax of uncompensated care."

Republicans hold 21 of the 35 seats in the Senate and 51 of the 100 seats in the House. A three-fourths majority is needed to expand Medicaid.

Legislative leaders said they are willing to work with Beebe toward a compromise on Medicaid, but that they're worried about the long-term impact of adding 250,000 people to the program. House Speaker Davy Carter, R-Cabot, told reporters he's worried about whether the federal government would expect Arkansas to pay more than 10 percent of the costs later.

"There aren't any guarantees that it's going to be a 90-10 split forever, and I think they're going to have to address that," Carter said after Beebe's speech.

House Majority Leader Bruce Westerman, R-Hot Springs, said the expansion would "a very tough sell" in the Republican-controlled House.

"We need to focus more on reforming the existing system that is somewhat broken before we talk about expanding anything new," he said.

Beebe also called on lawmakers to pass his proposal to cut the state's grocery tax from 1.5 percent to .125 percent if certain budgetary triggers are met. He said the proposal will allow the state to cut the tax in a financially responsible way, even if it's after he leaves office in 2015.

Beebe's proposed tax cut would take effect if the state's obligations in several areas, including court-mandated desegregation payments to three school districts, declined by $35 million over six months. Republicans have said they want to see if there's room for other tax cuts in Beebe's proposed $4.9 billion budget.

"I proposed that we pass legislation to make grocery tax relief the first call on this money when it becomes available," Beebe said. "It may not be another year or two years or even more, but when it happens the mechanism will be in place to make that final cut on the grocery tax and put money in the pockets of Arkansas taxpayers."

Beebe said he expected to have a good working relationship with the Republican-led Legislature, noting that former President Bill Clinton was able to balance the federal budget when the GOP controlled both chambers of Congress in the 1990s.

"We must resolve to not let Washington's animosity seep in and poison our well of civil discourse. Arkansas cannot change the way things are done in D.C., but we can continue to set the example of how men and women with different views can still come together in the best interest of our citizens," the governor said.

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