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Trump’s Medicaid crackdown comes for Arkansas

39,000 people's health care is at risk.

WASHINGTON, DC - JANUARY 16:  U.S. President Donald Trump and the Administrator of the Centers for Medicare and Medicaid Services Seema Verma (Photo by Alex Wong/Getty Images)
WASHINGTON, DC - JANUARY 16: U.S. President Donald Trump and the Administrator of the Centers for Medicare and Medicaid Services Seema Verma (Photo by Alex Wong/Getty Images)

On Monday, Arkansas became the third state to make unprecedented changes to its nearly 53-year old Medicaid program, the government-run insurance program for the poor and disabled. The state will now add work requirements and other restrictions as part of a nationwide conservative agenda to cut Medicaid rolls. In Arkansas, enrollment is expected to shrink by thousands.

The Trump administration allowed Arkansas to add an 80-hours-per-month work rule to its Medicaid program. The state will inform all Medicaid beneficiaries about the new rules by the first week of April, and enrollees will have to comply and report employment online beginning June 1st. This is an incredibly quick timeline, and Gov. Asa Hutchinson (R) estimates that Arkansas will be the first state to actually implement the new changes. If someone fails to meet the new work rules for three months, people will be locked out of coverage for the rest of the calendar year — one of the harshest requirements nationwide.

Speaking to reporters, Hutchinson and his staff couldn’t specify how much the state would spend on implementing the work rules (in outreach, for example) or how many people would move off Medicaid and presumably onto private insurance, despite having at least a year to work out the proposal. The plan is expected to affect about 39,000 current beneficiaries, who are childless and not federally recognized as disabled. As of January 2018, roughly 285,000 people enrolled in Medicaid statewide.

Nonetheless, state officials are excited to move ahead. The Arkansas Medicaid website even added a work rules section to its website ahead of the formal announcement on Monday:

Administrator of the Centers for Medicare and Medicaid, Seema Verma, hand-delivered the waiver approval to Arkansas officials on Monday. Before joining the Trump administration, Verma worked as a health care consultant and worked with Arkansas’s Medicaid program. It’s unclear whether she recused herself from policy matters involving this. Top Senate Democrats believe she is violating a conflict of interest agreement.

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The Trump administration’s approval of the work requirements isn’t a huge surprise, since officials permitted Kentucky and Indiana to implement similar requirements earlier this year. Like the other two states, Arkansas exempts various groups including pregnant people or full-time students, but deviates as it exempts those 50 years old and older, as opposed to the other two states who only exempt people 64 and older.

Arkansas had also asked the Department of Health and Human Services (HHS) to allow the state to end Medicaid expansion, without taking away the state’s additional federal funding. The department did not make a final decision on this request, and Hutchinson (R) said on Monday that HHS “will continue to work with us on that.”

If HHS had approved this request — or does in the future — enrollment into Medicaid would be limited to people at the poverty level (or $12,140 for an individual) instead of 138 percent of the poverty level ($16,753), as outlined in the Affordable Care Act (ACA). Approximately 61,000 people would have been kicked off coverage.

By not immediately approving this portion of the waiver, the Trump administration is signaling to other conservative states that it won’t approve just anything. Other red states are currently looking to test the limits on changing their Medicaid programs. Wisconsin, for example, sought federal permission to add enrollment time limits.

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Hutchinson argues the new work rules aren’t “about punishing anyone.” Even so, the unintended consequences of red tape means people will lose coverage.

“We know that anytime you add a new condition for eligibility, a lot of people lose coverage for administrative reasons,” said Patti Boozang, a Medicaid expert at Manatt Health who also helped develop Arkansas’s Medicaid waiver during its beginning stages.

The Trump administration approved other alterations to Arkansas’s Medicaid program. In addition to work rules, the state will be able to eliminate 90-day retroactive eligibility, meaning beneficiaries will no longer be covered for any medical expenses accrued three months before officially enrolling. Retroactive eligibility helps protect doctors and hospitals from absorbing costs of caring for the uninsured. Local officials also terminated a premium-assistance program for people who have access to employer-sponsored insurance. Only one person participated in this because employer participation was voluntary and, thus, low.