AutoInsuranceMM.Info – What is the Insurance – Arkansas and the ACA’s Medicaid expansion
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’ 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) 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). The state’s approach has been considered by a number of other states (and New Hampshire implemented a similar program), but also faces criticism for being less cost-effective than regular Medicaid expansion.
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.
Work requirement effective June 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 is being delayed until 2019 for people under the age of 30, but applies as of June 5 to people between the ages of 30 and 50 who aren’t otherwise exempt. They must work or participate in other community engagement activities at least 80 hours per month in order to maintain access to Medicaid coverage.
The details of the state’s Medicaid waiver are described below. Of particular importance is the low-cost, high-tech approach that the state has taken in terms of administering the work requirement. People subject to the Medicaid work requirement have to document their work hours via an online portal that the state has created, and there are no alternative ways for people to submit proof that they’re complying with the work requirement. This is despite the fact that only Mississippi has a larger percentage of residents without access to home internet than Arkansas.
The state has noted that not only is it cheaper to use an online system (versus hiring more people to work in country offices in order to have an in-person verification system), it will 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.
Medicaid expansion: How many people have enrolled?
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. But enrollment had climbed to over 320,000 by March 31, 2017. However, 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.
Transition to Arkansas Works in 2017
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.
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. (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 houshold income 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.
Arkansas Works under the Trump Administration: new rules approved by HHS
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 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.
In late January 2018, Hutchinson noted that he expected HHS to approve Arkansas’ work requirement waiver “in the near future,” but he noted that the other parts of the waiver could take longer. 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 can be implemented anytime on or after June 1, 2018. Medicaid enrollees who aren’t exempt from the requirement will have 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 will be 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 will apply to enrollees age 19 through 49; children and people age 50 and older are not subject to the work requirement. 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 is being eliminated, but as noted above, it was essentially unused, so this is not a significant change.
- Retroactive eligibility for Medicaid coverage is being 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 will 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 notes that Arkansas Works’ current voluntary work referral program has not been effective as far as CMS and the state are 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 is hoping that an actual work requirement—as opposed to a voluntary work referral program—will be more effective. There is little doubt that it will be effective in reducing the overall cost of the Medicaid program, as it’s likely to result in fewer people being eligible for coverage. But there is little evidence that it will actually result in a healthier population, which is one of the stated goals of the program.
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.
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.
The state is currently paying 6 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 allows premiums to be set at 2 percent of household income in 2018. For a person earning $16,000 in 2018, that works 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 $2,450 in 2018.
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 138 percent FPL
- Non-elderly adults with incomes up to 138 percent
- Certain elderly and disabled individuals: see chart for eligibility requirements
How to apply
You can get a Medicaid application online in English or Spanish, by visiting a Department of Human Services office in your county, or by calling 1-800-482-8988.
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 7.9 percent by 2016 — a decrease of more than 50 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. S.B.196 reauthorized Medicaid expansion in March 2017.
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 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 then-Secretary of HHS, Sylvia 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 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 are 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 imlement new modifications to Arkansas Works in 2018).
The notable modifications under Arkansas Works were:
- Premiums for people with income above the poverty level. Premiums will not exceed 2 percent of income, and enrollees will not be dropped from the plan if they don’t pay the premiums (the premium is $13/month in 2017, and will grow to 2 percent of income in 2018 and beyond; however, if CMS ends up approving Hutchinson’s plan to switch people above the poverty level off of Arkansas Works and onto regular exchange plans, this will be a moot point).
- Job training referrals for unemployed enrollees. But enrollees are not 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 did not agree to allow that in any state).
- 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 percent and 100 percent of the poverty level, but the final waiver amendment calls for eliminating the employer sponsored insurance premium assistance program altogether, since it has 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 is seeking approval for unconditional elimination of the retroactive coverage provision).
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.
The federal government paid the full cost of Medicaid expansion in Arkansas for 2014, 2015, and 2016, but the state began to pay 5 percent of the cost in 2017, and that will increase to 10 percent by 2020, continuing at that level going forward, assuming no changes are made to Medicaid expansion under the Trump Administration.
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 more than a million people by January 2017. However, it had dropped slightly, to 931,000 by January 2018, indicating that the uptick in enrollment following Medicaid expansion had stabilized by 2016.
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.