Arkansas officials call Maine GOP’s claims about Medicaid expansion in their state ‘misinformation’

Posted May 24, 2014, at 6:10 a.m.
Last modified May 24, 2014, at 12:19 p.m.

AUGUSTA, Maine — Officials in the state of Arkansas are saying “not so fast” to claims being made by leaders in Maine’s Republican Party that an expansion of Arkansas’s Medicaid program has led that state to fiscal crisis and Maine was wise not to expand its low-income health care program.

Amy Webb, communications director for the Arkansas Department of Human Services, said claims made in a guest column by Maine House Minority Leader Ken Fredette, R-Newport, were incorrect and misleading.

Webb characterized the claims as “misinformation” and said the implication that Arkansas’s Medicaid director recently resigned as a result of problems from the expansion was not true.

Fredette, in a guest column in the Bangor Daily News, published earlier this month, wrote Arkansas’s experience with expanding Medicaid was evidence that Maine made the right decision by not expanding its Medicaid program.

The Arkansas expansion of Medicaid, Fredette wrote, was over budget by $8 million and “the costly disaster has led their Medicaid director to resign, the state government to seek a federal bailout and former champions of the expansion to backtrack and disavow their support.”

Not so, said Webb.

“It’s not over budget at all,” she said. “It’s a three-year cumulative demonstration project, and we won’t know what the actual costs are for a full year. Folks who are saying we are over budget are simply making predictions that we would be over budget. At this time, we are not.”

Webb also said Arkansas’s Medicaid expansion, funded by the federal government, allows the state to use federal block grant funding to buy private health insurance for Medicaid-eligible residents on the state’s private insurance exchange.

The result of a compromise in the Arkansas State Assembly, lawmakers agreed to expand health insurance coverage without directly adding to the state’s Medicaid rolls.

Known as the “private option,” the Arkansas model is one method states with divided governments are using to reach legislative compromise that allows them to accept millions in new federal funds meant to expand the number of people with health care coverage. Maine’s neighbor, New Hampshire, enacted similar legislation this year, and Utah is in the process of debating it.

The Maine Legislature this spring approved a bill that would set up a private-option waiver with the federal government, but the bill was vetoed by Republican Gov. Paul LePage.

In his veto message, LePage noted the measure was modeled on the New Hampshire expansion, which was modeled on the Arkansas private-option program.

Most of Maine’s GOP lawmakers and LePage have rejected expanding Medicaid to about 70,000 uninsured people under the Affordable Care Act, saying it will be too costly for the state in the long term.

One estimate from a private consultant hired by LePage’s administration to analyze the impact of expansion pegged the cost at more than $800 million over a 10-year period.

Republicans say predictions of how many people the state will eventually cover with Medicaid are underestimated. They have suggested the growth in the program could reach an additional 100,000, not the 70,000 forecast by supporters.

Health policy experts say Fredette and other Republican opponents of expansion are not painting a full picture of what a Medicaid expansion would mean to the state.

The biggest flaw in the opponents’ approach, according to Joan Alker, executive director of the Georgetown University Health Policy Institute’s Center for Children and Families, is only looking at one side of the financial equation.

“Most analysis of Medicaid expansion has shown it actually saves states money,” Alker said. “Because the federal match is generous and because states are already spending money on these people — one way or another, they are spending some money on these uninsured folks — either in the mental health system, your substance abuse systems and with your uninsured in the ERs and uncompensated care.”

Maine, which already provides some of the best health care access for low-income people, only stands to benefit by accepting the federal funds, Alker said.

“I can see no reason at all why Maine would not want to accept these funds,” she said.

Alker said much state money typically goes to fund programs that support and help the uninsured or subsidize their treatment and care — but once those individuals become newly enrolled in the Medicaid system, the federal government under the ACA, at a minimum, will pick up 90 percent of those costs.

Expansion is covered at 100 percent of state costs until 2017, then the state’s share of the expense is slowly increased, but is capped at 10 percent.

Alker confirmed Arkansas’s “private option” system is set up on a three-year waiver and is flexible in terms of what the state can do to contain costs.

The agreement with the federal Centers for Medicare and Medicaid Services also has budget neutrality clauses that allow the state to seek more money to cover its cost if some projections, especially demographic ones, prove to be off target.

Some of what’s being portrayed by opponents to expansion as “unexpected” was “fully expected,” Alker said.

This includes the so-called “woodwork” or “welcome mat” effect, which is how opponents and supporters of expansion respectively refer to the growing numbers of people who were previously eligible for Medicaid but not enrolled in the program and now enrolling because of the ACA.

Even in the states that rejected the federal government’s offer to expand Medicaid, enrollments are up because as people seek health coverage under the ACA, they discover they are eligible for Medicaid and sign up, Alker said.

Webb, in Arkansas, said that state, so far, has covered 155,000 with the private option. In all, the state expects to cover 225,000. Webb said it was true that some projections were off and the cost for the private monthly premiums the state pays were “slightly up.”

She said one issue that led to higher premiums was that some plans were also covering dental and vision, which the state will disallow going forward.

And as Arkansas adds different plan options and more companies to its exchange, Webb and others expect the price of premiums to decrease with competition.

Webb said concern over projections that Arkansas was going into debt with the new program prompted the state to hire independent actuaries to analyze and review the program.

“And the actuaries found no cause for concern,” Webb said.

Meanwhile, advocates for expansion say the infusion of federal funding that comes with more health coverage bolsters the economy, and states that have expanded their Medicaid programs are seeing that benefit as well.

Maine advocates for expansion said the state is losing as much as $600,000 a day in new revenue by refusing to expand Medicaid.

One of the most immediate economic impacts in Arkansas, according to Webb, is that hospitals are seeing a dramatic reduction in the level of uncompensated care they are providing.

Uncompensated care at hospitals in Arkansas decreased 24 percent statewide in the first quarter of 2014, Webb said. She said at least one hospital was reporting its uncompensated care costs were down 50 percent.

“The hospital CEOs, some of them testified last week that the private option is literally the difference between them being in the red and in the black,” Webb said.

The Maine Hospital Association also supports the Medicaid expansion under the ACA, but in its fact sheet on the subject, the association notes, “The state share, 5 to 10 percent of the costs associated with expansion, should not be ignored.”

The association also noted that the federal government funded the ACA, in part by reducing Medicare reimbursement rates to to hospitals under the assumption that hospitals would see more funds coming from Medicaid.

But because Maine has not expanded Medicaid, hospitals are losing money from the Medicare rate reductions.

“In 2013, Maine hospitals lost over $33 million in Medicare reimbursement due to the ACA cuts,” according to the association’s fact sheet on expansion. “Over 10 years, Maine hospitals will lose about $900 million unless the state expands Medicaid.”


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