Arkansas to Become the First State to Roll Back Obamacare’s Medicaid Expansion

May 4, 2017 by AFP

While many in Congress continue to waver on efforts to repeal the 2010 healthcare law that canceled millions of health plans, raised the cost of insurance for millions of families, decreased patients’ access to the doctors of their choice, and stunted economic growth, state legislatures are taking action to peel back Obamacare policies that threaten their fiscal solvency and fail to provide adequate care for their most vulnerable residents.

With Governor Asa Hutchinson’s signature of legislation passed this week in special session, Arkansas will become the first state to enact reforms significantly scaling back Medicaid expansion under Obamacare.

The reforms recently passed by state lawmakers decrease eligibility for the program from 138 percent of the federal poverty level (FPL) down to 100 percent FPL. This reform is estimated to reduce state Medicaid rolls by 60,000 people, or approximately 20 percent of Medicaid expansion enrollment in the state – which has ballooned far beyond what the state ever projected and subsequently added tens of millions of dollars in cost.

The bill also instructs state leaders to submit request to the federal government for a work requirement for able-bodied individuals enrolled in the program, which the Trump administration has indicated they are likely to approve.

Medicaid is a social safety net program which was originally designed only to deliver the most necessary care to America’s most vulnerable citizens. For this reason, eligibility in the traditional Medicaid program is limited to low income children, pregnant women, the disabled, and some elderly populations. Capping the eligibility threshold of Medicaid expansion at 100 percent FPL, rather than 138 percent, is a good step towards bringing the program closer to its originally intended beneficiary group, and ensuring that limited state and federal dollars are flowing to the Arkansans who need it most.

The introduction of a work requirement for Medicaid is also an important step in reforming a broken government healthcare program that was originally intended to help elevate people out of poverty, but like other welfare programs has perpetuated a cycle of government dependence.

Fearing the loss of benefits that are attached to their low-income status, many Americans decline to pursue employment opportunities that might disqualify them from these programs, including Medicaid. In fact, some research indicates that state Medicaid expansions contributed to a significant decline in the labor force participation rate in states that chose to expand coverage.

This situation traps low-income individuals in a harmful status quo, with no real way to change their circumstances, which is why work requirements were included as part of bipartisan welfare reform legislation passed by Congress in 1996. The results were astounding: since the enactment of the work requirement, there has been a significant reduction in both childhood poverty and “deep poverty” (those living below 50 percent FPL) across the country.

These reforms also save taxpayer dollars, which is especially important for Arkansas right now. Starting this year, Medicaid expansion states are responsible for picking up five percent of Medicaid expansion costs, increasing up to ten percent by 2020.

These costs will be much higher than any state originally anticipated. Medicaid expansion enrollment is 110 percent higher than anticipated, and average benefits for each individual beneficiary were 49 percent more costly than projected.

Now that states must balance their budgets while including these explosive Medicaid expansion costs, many are looking at cutting spending in other critical areas or substantially raising taxes to make ends meet. Faced with this problem, it’s no surprise that Arkansas is not the only state looking at drawing back its Medicaid expansion; the Ohio legislature is actively pursuing reforms similar to Arkansas, while Oregon’s budget writers announced that one option for closing its budget gap would be to end its expansion entirely.

Other states should follow Arkansas’s lead and use reforms like work requirements and eligibility caps – as well as other ideas like enrollment freezes – to scale back their unsustainable Medicaid expansions, focusing instead on fiscally responsible healthcare reforms that will actually drive high quality, affordable care to their residents.

Regardless of the healthcare reforms being contemplated in D.C., it’s never too soon for states to start undoing the damage of Obamacare.