- Arkansas implemented a Medicaid work requirement in 2018. But a judge overturned it in March 2019, and the work requirement waiver was officially rescinded by HHS in March 2021.
- The Trump administration appealed the 2019 ruling, and SCOTUS was set to hear the case. But Biden administration asked for it to be canceled (so SCOTUS did not hear the case).
- Arkansas pioneered the “private option” approach to Medicaid expansion.
- Enrollment in expanded Medicaid declined after 2017, but has rebounded to nearly 2017 levels during the COVID pandemic.
- Transition to Arkansas Works in 2017
- HHS approved a work requirement for Arkansas Medicaid, effective in June 2018 (since suspended and then rescinded by HHS)
- Work requirement verification could initially only be completed online, but a phone hotline was added several months later.
- 18,000 people had lost coverage by December 2018 as a result of the work requirement
Arkansas led the nation in implementing an alternative to Medicaid expansion that was acceptable to some politicians who otherwise opposed the Affordable Care Act (ACA). Arkansas’ Medicaid expansion program was initially called the Arkansas Health Care Independence Program, but transitioned to Arkansas Works as of 2017. Both systems are also referred to as the Private Option, because Arkansas uses Medicaid funds to purchase private health insurance (QHPs, or qualified health plans) in the exchange for people who are eligible for expanded Medicaid (enrollees can pick from among available silver plans in their area, and Arkansas Medicaid pays the premiums).
of Federal Poverty Level
As of 2021, Arkansas is the only state still utilizing a private option approach (ie, with Medicaid expansion enrollees covered under state-purchased QHPs in the exchange, instead of fee-for-service or managed care Medicaid coverage).
Arkansas Medicaid enrollment numbers
Although Medicaid expansion resulted in a significant increase in enrollment in the first few years, enrollment had stabilized by 2016. Total enrollment (including expanded coverage and traditional Medicaid) as of January 2017 stood at more than a million people, but had dropped to 931,000 by January 2018. The state attributed the decrease in enrollment to a stronger economy and the state’s review of enrollees’ eligibility.
By January 2019, Arkansas Medicaid enrollment had dropped to under 850,000 people, due in part to the state’s implementation of a Medicaid work requirement in mid-2018. As of October 2018, there were 252,642 people covered under expanded Medicaid in Arkansas (i.e., they wouldn’t be eligible for Medicaid if the state hadn’t expanded the program under the ACA). In July 2018, before people began to be cut from the program due to the work requirement, there were more than 270,000 Arkansas Works enrollees.
But in the second half of 2018, over 18,000 people in Arkansas lost their health coverage as a result of the work requirement (that doesn’t mean they weren’t working; some people were simply unaware of the reporting requirements or unable to navigate the system for reporting their work hours).
By 2020, enrollment in Arkansas Medicaid had rebounded significantly, due to the suspension of the Medicaid work requirement as well as the widespread job losses caused by the COVID pandemic. Total enrollment in Arkansas Medicaid/CHIP stood at 905,019 as of March 2021. And 277,284 people were enrolled in Arkansas Works as of June 2020, although that had grown to an estimated 317,000 by early 2021 (states cannot disenroll people from Medicaid during the COVID public health emergency, unless they move out of state or request a coverage termination, so Medicaid enrollment has grown throughout the pandemic, nationwide).
Does Arkansas have a Medicaid work requirement?
Arkansas implemented a Medicaid work requirement in 2018, described below in detail. But Federal Judge James Boasberg overturned the Medicaid work requirements in Kentucky and Arkansas as of March 2019, noting that officials had not taken steps to prevent coverage losses stemming from the work requirement.
The Biden administration officially withdrew the state’s Medicaid work requirement waiver approval in March 2021, although it had not been in effect for two years prior to that.
So Arkansas is no longer removing people from the Medicaid program for failure to comply with the work requirement or reporting requirement, and the people who had already lost their coverage under the work requirement rules were able to re-apply for Medicaid — although many may not be aware that their access to Medicaid has been reinstated (albeit not automatically, as they do still need to re-apply for coverage).
As of March 2021, there were more than 905,000 people enrolled in Arkansas Medicaid and CHIP, which was higher than it had been in the months following implementation of the work requirement, but still lower than it had been in 2018, despite the fact that the COVID pandemic had been ongoing for a year.[hio_question]
Lawsuit over Arkansas Medicaid work requirement was slated for SCOTUS but hearing was canceled and work requirement waiver was then rescinded by HHS
The Trump administration appealed the case, as expected, and a panel of three judges on the U.S. Court of Appeals for DC heard oral arguments in the appeal in October 2019. During the arguments, all three judges expressed concerns about the coverage losses that stem from Medicaid work requirements, which was the crux of Boasberg’s ruling earlier in the year that suspended the work requirement. And in February 2020, the three-judge panel unanimously ruled that it was “arbitrary and capricious” for HHS to approve the Arkansas Works waiver, and upheld Boasberg’s ruling to overturn the state’s Medicaid work requirement. So the work requirement has remained suspended.
In July 2020, however, the Trump administration asked the Supreme Court to intervene and allow Arkansas to reinstate its work requirement once the COVID-19 situation is under control enough to allow the unemployment rate to return to normal levels. The Supreme Court justices agreed to hear the case, and oral arguments in the lawsuit, Arkansas v. Gresham, were scheduled for March 29, 2021 at the Supreme Court. (Kentucky had initially been part of the appeal, as that state’s work requirement had also been overturned, but Gov. Beshear removed Kentucky from the lawsuit and rescinded Kentucky’s Medicaid work requirement soon after taking office.)
But the Biden administration does not support Medicaid work requirements, and asked the Supreme Court to cancel the hearing. That request was granted, and Arkansas v. Gresham was not heard by the Supreme Court.
Soon thereafter, in March 2021, HHS officially withdrew approval for the Medicaid work requirement in Arkansas.
As of early 2020, Medicaid work requirements were in effect in Utah and Michigan, but both were soon paused (Michigan’s was overturned by a judge, and Utah’s was suspended as a result of the COVID-19 pandemic). The Biden administration has notified states with previously approved Medicaid work requirements that they are being reconsidered, and had withdrawn approval for most of them by August 2021.
Work requirement took effect in June 2018, and 18,000 people had lost coverage by the end of 2018
Arkansas received federal approval in March 2018 to make some modifications to the state’s Medicaid expansion program, including the implementation of a work requirement and the unconditional elimination of Medicaid’s three-month retroactive eligibility, replacing it with a 30-day retroactive eligibility provision instead. The waiver amendment was submitted in June 2017, and Arkansas had hoped to implement the changes by January 2018. But the waiver approval noted that the work requirement could be implemented no earlier than June 1, 2018.
The state wasted no time, however, and implemented it as of June 5, 2018. The work requirement was delayed until 2019 for people under the age of 30, but applied as of June 5 to people between the ages of 30 and 49 who weren’t otherwise exempt. They had to work or participate in other community engagement activities at least 80 hours per month in order to maintain access to Medicaid coverage. After three months of non-compliance, Medicaid eligibility would terminate.
So people began losing coverage as of the end of August for failure to comply with the work requirement — including failure to comply with the onerous reporting requirements, detailed below. By the end of 2018, more than 18,000 people had lost their Medicaid coverage in Arkansas under the new work requirement. A beneficiary who lost coverage due to non-compliance with the work requirement was locked out of Arkansas Works until the end of the year.
In July 2018, the state reported that 43,794 people were subject to the work requirement, which amounted to about 16 percent of the total Arkansas Medicaid expansion population (and less than 5 percent of the state’s total Medicaid population). And of the people who were subject to the work requirement, about two-thirds — more than 30,000 enrollees — were exempt from the reporting requirements based on information the state already had in its database (including parents with dependent children and people whose earnings history show that they’re already earning at least as much one would make working 20 hours per week at minimum wage).
The details of the state’s Medicaid waiver are described below. Of particular importance was the low-cost, high-tech approach that the state opted to take in terms of administering the work requirement. People subject to the Medicaid work requirement had to document their work hours via an online portal that the state created, and there were no alternative ways for people to submit proof that they were complying with the work requirement. I tried clicking on the “report work activities” link (no longer available now that a federal judge has shut down the state’s Medicaid work requirement) and ended up with a blank screen as of mid-June 2018; when I tried again in mid-August, the link worked correctly, but at that point, the website would shut down at 9 pm each night, and wasn’t available again until 7 am.
This is despite the fact that only Mississippi has a larger percentage of residents without access to home internet than Arkansas. The state clarified in May 2018 that people who don’t have a computer or who have difficulty reading or using the internet would be able to designate an assister who will be able to help them comply with the verification of the work requirement, but that only serves to highlight how much of an obstacle the reporting requirements may have been for some people.
The state noted that not only was it cheaper to use an online system (versus hiring more people to work in county offices in order to have an in-person verification system), it would also encourage people to become more computer literate. But it’s important to keep in mind that Medicaid is a health care program — not a jobs program or a life skills program or a computer literacy program. And taking away a person’s health care isn’t likely to improve their situation in life.
Amid an outpouring of criticism, Arkansas added a telephone hotline in December 2018 that Arkansas Works members could use (from 7am to 9pm) to report their work hours.
By August 2018, in the third month of the work requirement implementation, the vast majority of the people who had been expected to log into the state system to report their work activity were not doing so (83 percent in July, and 72 percent in June did not report their work or exemption). Of the 13,566 people who needed to report their work hours or seek an exemption for July (based on 43,796 being subject to the work requirement but 30,228 being automatically exempt), only 844 had satisfied the reporting requirement, and 1,571 reported an exemption (the report doesn’t clarify whether all of those exemptions requests were valid and granted). The large majority — 12,722 enrollees — did not meet the reporting/exemption requirements.
Not much had changed by October. At that point, after thousands of people had already lost their coverage due to non-compliance with the work requirement (and/or simply not being able to navigate the reporting system), more than 12,000 enrollees had not reported their work to the state. Only about 1,500 had satisfied the reporting requirement, and another 1,600 had reported an exemption.
After three months of non-compliance, enrollees were locked out of the Medicaid program and ineligible for coverage until January 2019 — even if they were working and reporting their work activities throughout the rest of 2019. Many of these individuals may have been working, attending school, or otherwise complying with the work requirement in June and July, but were unaware of the reporting requirement or unable to complete the reporting due to lack of internet access and/or an understanding of how the process works.
It was also notable that very few people were “incentivized” to begin working and reporting it to the state as a result of the Medicaid work requirement. As of December, just 1,311 people reported work activity to the state, but for most of them, it was automated by meeting the SNAP work requirements. As Joan Alker, of Georgetown University’s Health Policy Institute, reported, “this leaves just 462 people out of the 60,680 subject to the work requirement newly reporting work or job search activities” in December.
The Medicaid and CHIP Payment and Access Commission (MACPAC) sent a letter to HHS in early November, expressing concerns about the low level of reporting compliance in Arkansas and the high number of people who had lost their coverage. The letter notes that “the low level of reporting is a strong warning signal that the current process may not be structured in a way that provides individuals an opportunity to succeed, with high stakes for beneficiaries who fail.” MACPAC has called for a pause in disenrollments until adjustments are made “to promote awareness, reporting, and compliance.”
As noted above, the Medicaid work requirement in Arkansas was halted in March 2019 when Federal Judge James Boasberg ruled that the approval HHS had granted to Arkansas to implement a Medicaid work requirement “cannot stand” and was vacated. Although a legal battle ensued for the duration of the Trump administration, the Biden administration officially withdrew federal approval for the state’s Medicaid work requirement waiver in 2021, putting an end to the case.
Arkansas Medicaid expansion enrollment has declined significantly since 2016
By September 30, 2016, total enrollment in expanded Medicaid in Arkansas had reached 324,000 (about 7 percent of them were “medically frail” and are covered by the state’s traditional fee-for-service Medicaid rather than the Private Option). And by December 2016, there were 331,000 people enrolled in the state’s expanded Medicaid. 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 70 percent from the end of 2013 to December 2016, reaching 948,181.
But as of January 1, 2017, enrolled in expanded Medicaid dropped to 310,951, following the state’s efforts to remove people from Medicaid who were no longer eligible from the program. 21,280 non-eligible people were removed from the state’s expanded Medicaid rolls at the start of 2017. Enrollment had climbed to over 320,000 by March 31, 2017, but it had declined to 285,000 by January 2018, in line with the decline in the state’s overall Medicaid enrollment from 2017 to 2018.
As of January 2019, enrollment in Arkansas Works stood at 234,400 people (this was after 18,000 people had lost their coverage due to the work requirement that was implemented in mid-2018), although it had grown to 240,177 by April 2019. That’s more than 27% lower than it had been in 2016. Although that would be a positive change if the individuals in question had transitioned to employer-sponsored plans or other private health insurance options, Judge Boasberg’s ruling makes it clear that there are certainly a number of people who have lost Medicaid coverage and simply become uninsured.
By mid-2020, enrollment in Arkansas Works had grown to 277,284. Enrollment growth was tied to the suspension of the work requirement as well as the pandemic-related job losses. But it’s notable that Arkansas Works enrollment was still well below the level it had been a few years earlier. By 2021, enrollment had climbed to an estimated 317,000, although that was still lower than it had been in 2017, despite over a year of pandemic-related job and income losses.
Transition to Arkansas Works in 2017
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 took effect in 2017 (more details below).
Under Arkansas Works, enrollees with income above the poverty level now pay modest premiums for their coverage ($13/month in 2017, and 2 percent of household income starting in 2018), unemployed enrollees are referred to job training/referral, and enrollees can obtain coverage from their employers with supplemental funding from Medicaid.
But only about 20 percent of the 63,000 enrollees subject to premiums actually paid those premiums in 2017. (People who don’t pay the premiums are not disenrolled under the terms of Arkansas Works, and the state cannot send the overdue premiums to collections, place a lien on property, garnish wages, report the unpaid amounts to credit monitoring agencies, etc.). The state reported that of the people referred to job training, less than 5 percent followed through and obtained work referrals. And only one person ever used the Medicaid premium assistance program for employer-sponsored insurance.
Additional changes to Arkansas Medicaid expansion were approved by state lawmakers in May 2017, and Governor Hutchinson submitted an amendment to the state’s waiver in June 2017, which was under HHS review for several months. The proposed changes, detailed below, were mostly approved by the Trump Administration, although the state’s proposal to cap Medicaid eligibility at the poverty level (instead of 138 percent of the poverty level) was rejected.
On March 1, 2017, amid concerns about the future of Medicaid expansion under the Trump Administration, the Arkansas House of Representatives passed H.B.1465, which would have frozen Medicaid expansion enrollment as of July 1, 2017.
But a few weeks later, Republican leadership in the U.S. House of Representatives pulled the American Health Care Act without a vote, keeping the ACA intact for the time being (the bill later passed the House, but fell short in the Senate). The following week, the Arkansas Senate approved another year of funding for Medicaid expansion by passing S.B.196. The Arkansas House of Representatives passed it at the end of March, and Governor Asa Hutchinson signed it into law in early April.
Arkansas Works under the Trump administration: new rules approved by HHS
The Arkansas Works waiver allowed 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 had expressed his intent to continue to push for more modifications to Arkansas Works under the Trump Administration. In March 2017, Hutchinson announced that he was directing the state Department of Human Services to draft a proposal to amend the Arkansas Works waiver. The changes he suggested included a work requirement, capping eligibility at the poverty level, instead of 138 percent of the poverty level, and allowing state control of eligibility determination, using a new computer system the state has put in place.
The Arkansas legislature passed S.B.3 and H.B.1003 in May 2017; Hutchinson signed them into law the next day. The bills called for Arkansas to seek a waiver from HHS allowing a work requirement for some Medicaid enrollees, and a Medicaid expansion eligibility cap of 100 percent of the poverty level. The legislation also called for the state to “study and analyze” small employer coverage in Arkansas, and determine ways to strengthen employer-sponsored insurance and help more businesses offer coverage to their workers.
The state’s waiver amendment proposal was submitted to HHS in June 2017, and although Hutchinson had initially hoped that the waiver would be approved in time for the changes to take effect in January 2018, a modified approval of the waiver proposal didn’t come until March 2018.
The waiver called for four basic changes to implement the reforms that Hutchinson had proposed:
- A work requirement (also known as a “community engagement” requirement, as it can also be fulfilled by attending school, job training, performing community service, or volunteering)
- Capping eligibility at the poverty level, instead of 138 percent of the poverty level. For a single individual, the poverty level in 2018 is $12,140, while 138 percent of the poverty level is $16,753. This was the only aspect of the proposed amendments that CMS did not approve.
- Elimination of the Arkansas Works employer-sponsored insurance premium assistance program (this was put in place by the initial Arkansas Works waiver, but it was only ever used by one enrollee).
- Eliminating retroactive eligibility, unconditionally. Federal Medicaid rules allow new enrollees to be covered for medical expenses that were incurred up to 90 days before they enrolled, and Arkansas wanted to mostly eliminate that provision. CMS had already approved the elimination of retroactive eligibility in Arkansas (with coverage simply back-dated to the first of the month during which the person applies, rather than 90 days before the application date), but with conditions attached, requiring the state to come into compliance with eligibility determination requirements. The state’s amendment to the Arkansas Works waiver asked CMS to remove those conditions and simply let the state eliminate retroactive eligibility for Medicaid without making any other changes to protect consumers’ access to coverage.
On March 5, 2018, the Trump administration approved most of the state’s proposed changes, although they did not approve the reduced cap on Medicaid eligibility.
- The community engagement requirement was approved, and was phased in starting in June 2018. (As noted above, a federal judge halted the program in March 2019, and the Biden administration withdrew the waiver approval in 2021.) Medicaid enrollees who aren’t exempt from the requirement would have had to complete at least 80 hours per month of work, volunteering, community service, education, or job training, and report this information to the state each month. People who fail to report their community engagement for three months are disenrolled from Medicaid for the rest of the calendar year (ie, for up to nine months, which is a significant lock-out window).
- The community engagement requirement applies to enrollees age 19 through 49; children and people age 50 and older are not subject to the work requirement. (The work requirement took effect for people age 30-49 in June 2018 and for those under 30 starting in January 2019.) There are also exemptions for pregnant women, children, a caretaker of someone who is either incapacitated or a minor child, people in alcohol or drug treatment programs, people who are disabled or otherwise physically unable to work, people receiving unemployment benefits or Transitional Employment Assistance cash assistance, as well as a “good cause exemption” for people who can demonstrate that they had a justifiable reason for not completing their 80 hours of community engagement in a month.
- The Arkansas Works employer-sponsored insurance premium assistance program was eliminated under the terms of the waiver, but as noted above, it was essentially unused, so this was not a significant change.
- Retroactive eligibility for Medicaid coverage is set at 30 days in Arkansas. So a person who enrolls in Medicaid can have coverage backdated to 30 days before the application date, but no earlier than that. Federally, there’s a 90-day retroactive eligibility period, but CMS noted that the Arkansas waiver would allow them to test “whether eliminating 2 of the 3 months of retroactive coverage will encourage beneficiaries to obtain and maintain health coverage, even when they are healthy.”
- Notably, the waiver does not require Arkansas to give hospitals an opportunity to use presumptive Medicaid eligibility. In public comments on the earlier Arkansas Works waiver, consumer advocates had expressed grave concerns about the state’s efforts to eliminate retroactive eligibility, particularly given that Arkansas does not have a presumptive eligibility program in place. Commenters noted that the elimination of retroactive eligibility would simply result in cost-shifting from the Medicaid program to low-income residents and their health care providers, and would do nothing to improve the population’s overall health.
The waiver approval noted that Arkansas Works’ voluntary work referral program had not been effective as far as CMS and the state were concerned, with only a tiny fraction (4.7 percent) of beneficiaries referred to the program actually following through and accessing the work referral services (23 percent of those individuals subsequently obtained a job). The state was hoping that an actual work requirement—as opposed to a voluntary work referral program—would be more effective.
There was little doubt that it will be effective in reducing the overall cost of the Medicaid program, as it was clear that fewer people would have coverage once the work requirement was implemented (indeed, 18,000 people lost coverage in the second half of 2018). But there was little evidence that it would actually result in a healthier population, which was one of the stated goals of the program. And in hindsight, the program has also been woefully ineffective at actually getting people to newly-report community engagement.
Several states had proposed work requirements and capping eligibility at the poverty level under the Obama Administration, but it was always a non-starter. But the Trump Administration has taken a different approach. Work requirements were approved for Kentucky and Indiana in early 2018, which had never been done before, and have since been approved for several other states. But the work requirements in Kentucky and Arkansas have been overturned by a federal judge, and although the Trump Administration is appealing that ruling, the legal status of Medicaid work requirements is still up in the air.
Capping eligibility at the poverty level instead of 138 percent of the poverty level would have made 60,000 current Arkansas Works enrollees ineligible for coverage. They would have been switched instead to regular premium subsidies (and cost-sharing subsidies if they pick Silver plans) for plans purchased in the exchange. However, their premiums and out-of-pocket medical costs, even after subsidies, would have been substantially more than they are with Medicaid, making coverage and health care unaffordable for some of them.
As of 2019, the state is paying 7 percent of the cost of covering that population on Arkansas Works, and that will increase to 10 percent by 2020. But if current enrollees with income above the poverty level had been required to switch to regular exchange plans instead of Arkansas Works, the state would no longer be paying for any of their coverage. Instead, enrollees would pay some premiums and the federal government would pay the rest, via premium subsidies.
Arkansas Works enrollees with income above the poverty level were charged $13/month in premiums in 2017, although the new Arkansas Works waiver allowed premiums to be set at 2 percent of household income as of 2018. For a person earning $16,000 in 2018, that worked out to about $26/month. If those enrollees had been transitioned to a plan in the exchange, their premiums (for the second-lowest-cost silver plan) would have also been about 2 percent of their income, but their cost-sharing (even with cost-sharing reductions) would have been much higher than it is under Medicaid, as total premiums and cost-sharing cannot exceed 5 percent of income in the Medicaid program (ie, total premiums and out-of-pocket costs cannot exceed $800/year if a person is earning $16,000. In comparison, the maximum out-of-pocket costs (in addition to premiums) for a person at that income level with a cost-sharing reduction plan is $2,600 in 2019.
Who is eligible 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% of FPL
- Pregnant women with incomes up to 209% of FPL
- Parents with incomes up to 138% FPL
- Non-elderly adults with incomes up to 138% (many of these individuals were subject to a work requirement from mid-2018 until March 2019; that work requirement has been overturned by a federal judge, but the ruling is being appealed and the work requirement could end up being reinstated).
- Certain elderly and disabled individuals: see chart for eligibility requirements
How do I enroll in Medicaid in Arkansas?
You can also enroll online through Healthcare.gov if you are a non-disabled adult under age 65.
What is Arkansas' Medicaid expansion '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 initially referred 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 has since changed the name of the program to Arkansas Works, but the state still purchases private plans for enrollees, using Medicaid funds.]
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% of FPL, and limit some transportation services.
The growth in Arkansas Medicaid enrollment has played a significant role in the reduction in the uninsured rate in the state. According to U.S. Census data, 16% of Arkansas residents were uninsured in 2013, and that had dropped to 7.9% by 2016 — a decrease of more than 50%.
However, the future of Arkansas’ Private Option/Arkansas Works is not certain. The state legislature must reauthorize the program annually — with a 75% majority in both the House and Senate. In 2014, it took five attempts to pass reauthorization. S.B.196 reauthorized Medicaid expansion in March 2017. In 2019, the Arkansas House declined to reauthorize Medicaid expansion funding just two days after the state’s Medicaid work requirement had been overturned by a federal judge. But the following week the measure was approved was signed into law in early April, reauthorizing Medicaid expansion funding in Arkansas until the end of June 2020.
Although a few other states have implemented similar programs, they have all abandoned that approach as of 2019. Enrolling Medicaid beneficiaries in private plans is significantly more expensive than using a traditional fee-for-service or Medicaid managed care approach.
Similar program, new name
After 2016, Medicaid expansion in Arkansas was called “Arkansas Works” instead of the Private Option. But it was widely noted that the fundamental mechanics of the new program were very similar to the Arkansas Health Care Independence Program, which was the name of the Arkansas waiver program from 2014 through 2016. Arkansas still uses Medicaid funds to purchase private coverage for eligible enrollees in the exchange, which was the basic premise of the Private Option in the first place.
But lawmakers who were opposed to the Private Option were 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).
Lawmakers considered an 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.
In April 2016, 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 continued — with some modifications — in 2017 (as noted above, Arkansas is seeking CMS approval to implement new modifications to Arkansas Works in 2018).
- Premiums for people with income above the poverty level. Premiums cannot exceed 2 percent of income, and enrollees will not be dropped from the plan if they don’t pay the premiums (the premium was $13/month in 2017, but grew to 2 percent of income in 2018 and beyond).
- Job training referrals for unemployed enrollees (this transitioned to a work requirement under the Trump Administration, although that has been halted by a federal judge as of 2019).
- Some Medicaid-eligible residents who have the option for coverage through an employer 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. Under the Trump Administration, Hutchinson was initially pushing to allow this for any employer-sponsored plan for enrollees who earn between 75% and 100% of the poverty level, but the final waiver amendment called for eliminating the employer-sponsored insurance premium assistance program altogether, since it had remained essentially unused.
- People would be covered by Medicaid once they enroll, with no 90-day retroactive coverage (CMS made this conditional in the original Arkansas Works waiver, but the state later received approval to eliminate the retroactive coverage provision unconditionally).
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 increased to $570.50/month, which was 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.
Arkansas Medicaid history
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% of the state’s 510,000 uninsured residents (as of 2014) were eligible for Medicaid according to the Kaiser Family Foundation.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.