Who is eligible
Children from 0-18 with incomes up to 211% of FPL; pregnant women with incomes up to 209% of FPL; parents with incomes up to 133% of FPL; non-elderly adults with household incomes up to 133% of FPL; certain elderly and disabled individuals.
- healthinsurance.org contributor
- December 9, 2016
Arkansas led the nation in implementing an alternative to Medicaid expansion that was acceptable to some politicians who otherwise oppose the Affordable Care Act (ACA). Arkansas’ Private Option has been adopted by a number of other states.
By September 30, 2016, total enrollment in expanded Medicaid in Arkansas had reached 324,000 (about 7 percent of them are “medically frail” and are covered by the state’s traditional fee-for-service Medicaid rather than the Private Option). The state’s total Medicaid enrollment (including the newly eligible population as well as people who were already eligible under the previous guidelines) grew by 69 percent from the end of 2013 to September 2016, reaching 938,313.
In April 2016, lawmakers in Arkansas voted to approve and fund an overhaul of Medicaid expansion in Arkansas, dubbed “Arkansas Works”. The state submitted the new waiver proposal to CMS in June 2016, and CMS reviewed it over the following months. In December 2016, CMS granted approval for most of the modifications the state had requested, with a five-year extension of the “Arkansas Works” Medicaid demonstration waiver, which takes effect in 2017. (details below).
Under Arkansas Works, some enrollees will pay modest premiums for their coverage, unemployed enrollees will be referred to job training, some enrollees will obtain coverage from their employers with supplemental funding from Medicaid, and coverage will no longer have a 90 day retroactive effective date (more details below).
Arkansas Works under a Trump Administration
The Arkansas Works waiver allows the state to continue to implement Medicaid expansion using private coverage, and to implement some modifications to the program. But some modifications — like a work requirement and an asset test — were not permitted by CMS under the Obama Administration.
Governor Hutchinson has expressed his intent to continue to push for more modifications to Arkansas Works once President-elect Trump takes office. And lawmakers in the state are likely to seek further modifications to Arkansas Works in upcoming legislative sessions, secure in the knowledge that a Trump Administration CMS is likely to be more receptive to some of their more conservative modifications, and more willing to let states chart their own paths, with fewer federal restrictions.
That’s assuming, of course, that funding for Medicaid expansion isn’t eliminated entirely under a Trump Administration. For the time being, the future of the ACA is up in the air. But lawmakers have expressed tentative plans to repeal/replace the law with a two- or three-year delay, which means Medicaid expansion could possibly continue uninterrupted in the near future.
Who qualifies for Medicaid in Arkansas?
The federal government specifies certain low-income populations (for example, pregnant women) that must be covered in order for a state to qualify for Medicaid funding. The federal government also defines optional coverage groups and establishes baseline income guidelines. States can set eligibility limits at or above the federal guideline.
Here is where Arkansas has set its eligibility levels:
- Children from birth to age 18 with incomes up to 211 percent of FPL
- Pregnant women with incomes up to 209 percent of FPL
- Parents with incomes up to 133 percent FPL (138 percent after the built-in 5 percent income disregard)
- Non-elderly adults with incomes up to 133 percent (138 percent after the built-in 5 percent income disregard)
- Certain elderly and disabled individuals: see chart for eligibility requirements
How to apply
You can also enroll online through Healthcare.gov.
Medicaid expansion: the Private Option
Arkansas is among the states expanding Medicaid, but it is using a non-standard approach or waiver. Arkansas’ Medicaid expansion waiver allows the state to use Medicaid expansion funds to subsidize premiums for beneficiaries who purchase private health insurance through the health insurance marketplace.
Arkansas refers to its Medicaid expansion as the Private Option and to those enrolled in it as the Private Option Beneficiaries. Private Option Beneficiaries are eligible for all Medicaid services (even if those services would not normally be covered by the private health plan). Private Option Beneficiaries who have income above the FPL are responsible for cost-sharing (copayments), but cost-sharing can’t exceed 5 percent of family income.
Arkansas received federal approval in late 2014 to amend its Private Option waiver. The approved changes establish health savings accounts for beneficiaries, allow cost-sharing for Private Option Beneficiaries at 50 percent of FPL, and limit some transportation services.
The growth in Medicaid enrollment has played a significant role in the reduction in the uninsured rate in Arkansas. According to U.S. Census data, 16 percent of Arkansas residents were uninsured in 2013, and that had dropped to 9.5 percent by 2015 — a decrease of nearly 41 percent.
However, the future of Arkansas’ Private Option is not certain. The state legislature must reauthorize the Private Option annually — with a 75 percent majority in both the House and Senate. In 2014, it took five attempts to pass reauthorization.
Governor Hutchinson worked to modify Medicaid
Republican Governor Asa Hutchinson took office in January 2015. Soon after, he expressed his desire to overhaul the state’s Medicaid program, and make changes to the current Medicaid expansion model. But he noted that his preference was to continue the existing program through 2016, to avoid disruption for beneficiaries and medical providers. In February 2015, lawmakers approved an extension of Medicaid expansion through the end of 2016 (Senate Bill 96/Act 46).
In August 2015, Hutchinson laid out his vision of the future of the Medicaid program, including a premium requirement (not more than two percent of income) for Medicaid beneficiaries with household income between 100 percent and 138 percent of the federal poverty level.
Hutchinson also expressed an interest in switching lower-income enrollees back to traditional Medicaid instead of enrolling them in Medicaid-funded private insurance, along with a requirement that people eligible for employer-sponsored insurance must take it instead of using Medicaid (but Medicaid funds would be available to cover their out-of-pocket exposure on the employer-sponsored plan). It’s worth noting, however, that very few Medicaid enrollees are eligible for employer-sponsored insurance, because so few low-wage employers offer benefits.
In September 2015, Hutchinson said that he had discussed his ideas for modifying Arkansas’ Medicaid expansion waiver with HHS Secretary Burwell, and noted that while she was “cautious” about the changes, she “indicated that she is happy to work with [Arkansas] on each of these [proposed changes].”
Hutchinson details his proposal
At the end of December 2015, Hutchinson sent a letter to Burwell, outlining his plan to continue Medicaid expansion in Arkansas past the end of 2016, and indicating the changes he wished to incorporate into the amended 1115 waiver. They included job training referral requirements, small premiums for people with income over the poverty level, and a requirement that Medicaid-eligible people with access to employer-sponsored insurance enroll in the plan available from their employer (with premiums and cost-sharing covered by Medicaid).
Hutchinson also wanted to eliminate the 90-day retroactive coverage provision in Medicaid, and place restrictions on coverage for people with “substantial assets.” The ACA specifically forbids asset tests under Medicaid expansion (ie, eligibility must be based solely on income, without regard for how much savings enrollees have, or how much their homes are worth). A representative for Hutchinson has said that the Governor’s plan wouldn’t bar people with substantial assets from receiving coverage under the Medicaid program, but would instead charge them a fee for participation (labeled an “enhanced cost-share”). The fee would apply to anyone with a home valued at more than $200,000, or with more than $50,000 in cash-equivalent assets. The Governor’s representative suggested that the fee might start at $100/month, and would increase depending on the level of assets the enrollee has.
But the “enhanced cost-share” for people with substantial assets was a very thinly disguised asset test, and CMS rejected it very early in the discussions.
Hutchinson met with Burwell in February 2016 to discuss the details of his proposal. Other than the higher fee for people with significant assets, CMS indicated that the rest of the proposals would likely be approved.
It’s worth noting that at the federal level, the Private Option could be challenged going forward on the basis of a Government Accountability office (GAO) report. The GAO found that, in approving Arkansas’ Private Option, the Health and Human Services (HHS) Department did not ensure that the program would be budget-neutral to the federal government, which is a requirement for Medicaid waivers. Medicaid reimburses providers at a lower rate than private health insurance plans, but when Arkansas submitted their Private Option waiver, they presented the two alternatives as if they would cost the same. And apparently, CMS didn’t question their assertion, perhaps because their desire for the state to expand Medicaid outweighed their obligation to ensure that Medicaid expansion waivers are deficit neutral.
Similar program, new name
Hutchinson also said that his replacement for the Private Option after 2016 would be called “Arkansas Works” – although it’s been widely noted that the fundamental mechanics of the program would be very similar to the Public Option. Arkansas would still use Medicaid funds to purchase private coverage for eligible enrollees in the exchange. But lawmakers who are opposed to the Private Option would be able to “end” it and replace it with “Arkansas Works” – in many cases, fulfilling campaign promises but without the ramifications that would ensue if the state were to kick 300,000 people off their health insurance (that’s what would happen if they were to truly end Medicaid expansion).
Arkansas will still use Medicaid funds to purchase private coverage for eligible enrollees in the exchange. But lawmakers who are opposed to the Private Option would be able to say they “ended” it and replaced it with “Arkansas Works” – in many cases, fulfilling campaign promises but without the ramifications that would ensue if the state were to kick 300,000 people off their health insurance (that’s what would happen if they were to truly end Medicaid expansion).
Lawmakers considered extension of Medicaid expansion during a special legislative session in April 2016, prior to the regularly-scheduled session. Arkansas Works was approved, but the funding details still had to be sorted out at that point.
On April 14, the Arkansas Senate narrowly rejected SB121, the legislation that would continue funding for Arkansas Medicaid, including Arkansas Works. The bill was then sent back to committee, where it was amended to add a sunset provision for Arkansas Works, ending the program on December 31, 2016. This was a circuitous route to ultimately extending Medicaid expansion, as it essentially required Democratic lawmakers to vote to end Medicaid expansion – and opponents of Medicaid expansion get to also say that they voted to end Medicaid expansion – although they were relying on the Governor’s line-item veto power to preserve Medicaid expansion.
That version was approved by the Senate on April 20, in a 27 – 2 vote. It needed 27 votes to pass. The previous version of the bill – without the sunset amendment – had garnered 25 votes, falling short by only two votes.
SB121 quickly passed in the House as well, and was sent to Hutchinson for his signature, with lawmakers counting on Hutchinson’s promised line-item veto of anything that would end Arkansas Works. Hutchinson did employ the line-item veto to prevent Medicaid expansion from ending, and SB121 became law (Act 3) in May 2016.
The only remaining hurdle at that point was obtaining approval from CMS to implement the changes called for in Arkansas Works. In December 2016, CMS granted a five-year approval for Arkansas Works, and the state’s Medicaid expansion program will continue — with some modifications — in 2017.
- Premiums for people with income above the poverty level. Premium will not exceed 2 percent of income, and enrollees will not be dropped from the plan if they don’t pay the premiums.
- Job training referrals for unemployed enrollees. But enrollees will not be required to attend the job training, and will not be dropped from coverage if they fail to maintain a job (this is something that Governor Hutchinson has said he wants to continue to pursue under President-elect Trump’s Administration; his goal is to have a work requirement for Arkansas Works, but the Obama Administration has not agreed to allow that in any state).
- Some Medicaid-eligible residents who have the option for coverage through an employer will use the employer coverage, with Medicaid funds used to ensure that the costs for the enrollee are no more than they would have been under Medicaid. Hutchinson noted that this was the one area that CMS modified the provisions in the state’s waiver proposal, limiting the premium assistance program for employer-sponsored insurance to employers that are newly offering coverage.
- People will be covered by Medicaid once they enroll, with no 90-day retroactive coverage.
CMS put a cap on the total per-person amount that they would pay for the Private Option/Arkansas Works, in order to ensure that the privatized version of Medicaid expansion wouldn’t cost the federal government more than an expansion of fee-for-service coverage. For 2017, the average per-enrollee cost approved by CMS will increase to $570.50/month, which is a 9 percent increase over the per-enrollee cost in 2016. The higher costs are due to increasing prescription costs (a nationwide issue) and higher utilization of healthcare services among Arkansas Medicaid expansion enrollees.
The federal government has been paying the full cost of Medicaid expansion in Arkansas for 2014, 2015, and 2016, but the state will start to pay 5 percent of the cost in 2017, and that will increase to 10 percent by 2020, and continuing at that level going forward.
History of Medicaid in Arkansas
Arkansas implemented Medicaid on Jan. 1, 1970. The program is administered by the Arkansas Division of Medical Services, which is part of the Arkansas Department of Human Services.
As with nearly all other states, Arkansas provides Medicaid services to some beneficiaries though managed care arrangements. According to the Kaiser Family Foundation, about 86.5 percent of Arkansas Medicaid beneficiaries were enrolled in Medicaid managed care as of 2014. Managed care arrangements are a strategy to help states improve the quality of care provided and control costs.
With Arkansas’ decision to expand Medicaid, 55 percent of the state’s 510,000 uninsured residents (as of 2014) were eligible for Medicaid according to the Kaiser Family Foundation.
Arkansas Medicaid/CHIP enrollment in 2013 stood at 556,851 people. But it had grown to 938,313 by September 2016.