You thought Mike Beebe was Merlin for the way he orchestrated the legislature to get what he wanted, year after year, even when the other party controlled it. What about Governor Asa Hutchinson?
Only two months after an election that brought him to power with a much larger phalanx of foes of the Medicaid expansion that had barely squeaked by in 2013 and 2014, Hutchinson embraced the program warmly with a few caveats and three days later the Senate approved it, 29-2. Mike Beebe must have been amazed.
Hutchinson gave the Medicaid foes some needed cover. He is creating a task force to study the whole giant Medicaid program, which pays for nursing-home care, children, disabled and all the rest. It is to recommend reforms in the whole program that will rein in costs over the long run, perhaps involve the private sector more but still insure all those 225,000 to 250,000 Arkansans who are getting medical insurance for the first time as a result of Arkansas’ full participation in the Patient Protection and Affordable Care Act of 2010, more unpopularly known as Obamacare.
That is the most remarkable part of Hutchinson’s speech on health care at the University of Arkansas for Medical Sciences. He talked about overcoming the politics and hatreds spawned by the law’s passage and the elections afterward. But most important, he said, was the human impact on Arkansas.
“We have approximately 210,000 individuals in Arkansas [it’s closer to 300,000] who have never had health insurance before and now have access to healthcare and insurance,” he said. “That is a benefit to the state of Arkansas. Secondly, you have a benefit to urban hospitals, such as UAMS, and rural hospitals all across the state. Those two benefits are facts that we cannot deny, should not deny, and should rejoice in.”
He told heart-tugging stories about people he had met whose lives were changed because they had the insurance to get healing treatment. He will have no part in rending that safety net. He said he and the legislature, through the task force, would see that the system is even better, more economical and more efficient. He read a letter from President Obama’s secretary of health and human services encouraging him in his quest and offering optimism that if federal waivers were needed to attain his goals, he would get them.
The resistance in the legislature comes principally from the argument that when the state has to start paying part of the cost of the Medicaid program it might be beyond the state’s means.
We can help the governor with that task.
In 2017, the state will have to pay 5 percent of the cost of covering the last of the Medicaid population made eligible by the Affordable Care Act. Then the state share will rise to 10 percent after 2020 and stay there. Can the state afford it even if it maintains the present “private option” plan for Medicaid?
The short answer is yes. Follow our figures.
As of the end of November, 223,456 people had enrolled in the Medicaid program, most in commercial insurance plans under Arkansas’ unique private option but about a tenth of them, the medically frail or very sick, in the cheaper direct Medicaid. That figure should approach 250,000 by the end of this fiscal year. That should be about everyone in Arkansas who is eligible, so there should be little growth in enrollment after that. This year, the Medicaid division calculates that the federal government will spend $1.38 billion on the Arkansas program.
That number should grow some but not much because the enrollment will be fairly stable unless there is a great recession. The per-enrollee costs have been going steadily down, not up, for a year.
In 2017, if the total costs rise to $1.5 billion, Arkansas’ 5 percent share would be $75 million. Let’s be liberal and project the total cost in 2021 to be $1.7 billion. The state’s 10 percent share would be $170 million.
So to make the program completely revenue neutral, the state would need to see $180 million in savings to the treasury. Is that possible? It’s probable and close to certainty.
This year, the state is saving $89 million of state funds because Obamacare assumes all the state’s costs for certain categories of patients that were already covered before Obamacare: medically indigent adults, women with breast or cervical cancer and others. That savings will grow gradually over the years because that patient population and their costs will grow. It’s only a guess, but the savings to the state by 2021 should be $100 million or more. The state treasury this year also will be saved more than $33 million because, thanks to Obamacare, the state medical center, the prisons and other institutions will no longer have unreimbursed care that the taxpayers must pay for. Who knows what the figure will be in 2021?
Because most of those 225,000 new Medicaid enrollees are buying insurance policies, the federal government is paying their premiums and also the premium tax that the state levies on each policy each year. Last year, the state treasury took in $20 million from the new premium taxes. That annual figure will continue to rise until everyone is insured.
We have already recovered the $75 million in 2017 and the $170 million in 2021 and we have not even calculated the treasury receipts from income, sales and excise taxes as Washington pumps $1.5 billion to $1.7 billion a year into the state economy. It has already had an impact on job growth and treasury receipts, which have exceeded forecasts. Republicans in Washington are fond of “dynamic scoring.” To use dynamic-scoring formulas, we could calculate that all that federal aid will raise state tax receipts by another $100 million a year. But we won’t.
This does not consider the sharp decline in the number of additions to the Social Security disability rolls since the Medicaid expansion took effect in October 2013, or to reduced bankruptcy filings, or the hundreds of millions in savings for hospitals across the state. Because the state treasury does not fund them, we won’t count their savings.
Can the state afford it? You bet.
