To date, 32 states have expanded their Medicaid programs to cover those with incomes up to 138 percent of the federal poverty level (FPL), a result of the Medicaid expansion policies implemented by the much-debated Affordable Care Act (ACA). While many states controlled by Democrats simply expanded their existing programs, many Republican-controlled states were much slower to act, as they looked for ways to reform in a way that might appeal to their more-conservative electorates. The most notable example of this is Arkansas, which has been held up by many Medicaid-expansion proponents as a Republican model for expansion.
According to a Research & Commentary by Heartland Senior Policy Analyst Matthew Glans, “Arkansas is the originator of the private-option model that many states used to expand their Medicaid programs. With its Medicaid expansion failing to contain rapidly increasing costs, Arkansas will soon become the first state to enact reforms significantly scaling back Medicaid expansion under the ACA.”
The Arkansas “premium assistance” model passed in 2013, eventually adding 250,000 recipients to its Medicaid rolls. The state’s program enabled the newly eligible to purchase subsidized insurance on the Obamacare health insurance exchange. However, the ballooning costs associated with the Arkansas model led lawmakers in the state to look for ways of reining the program back in.
A report from the U.S. Department of Health and Human Services (HHS) found the average cost of ACA’s Medicaid expansion enrollees was nearly 50 percent higher in fiscal year 2015 than previously projected. In 2015, Medicaid expansion enrollees cost an average of $6,366, not the projected $4,281.
According to Americans for Prosperity, a vocal proponent of the recently approved reforms to the model, “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 new law also mandates the state seek a waiver from the federal government to allow Arkansas to impose work requirements for able-bodied individuals seeking to enroll. According to Glans, “The new work requirements that would be included with the rollback use methods that proved to be very effective when they were included in the welfare reforms of the 1990s; in a study examining poverty after the 1990’s welfare reforms, the Manhattan Institute found the inclusion of work requirements led to substantial reductions in poverty nationwide.”
With the fate of the ACA still in doubt and the increased costs associated with Medicaid expansion (and declining federal match), more expansion states will likely have to apply for waivers to cut costs.
States that have not yet expanded Medicaid would be best served to apply for waivers and offer solutions to help better serve existing enrollees before even considering expansion. Expansion states should look to Arkansas’ new reforms as a warning, and possibly a model, for fixing many of the problems created by expansion.
What We’re Working On
Health Care
Research & Commentary: State High-Risk Pools for Health Insurance
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines high-risk health care pools and the important role they could play after a repeal of the Affordable Care Act. “Embracing high-risk pools and encouraging them to thrive would allow states to abandon guaranteed issue and provide health insurance to a vulnerable population while helping to keep all health care insurance prices down. State legislators should consider implementing or expanding high-risk pools to protect their citizens and encourage a well-functioning health insurance market,” Glans wrote. Read more
Energy & Environment
Research & Commentary: Study Says Methane in North Texas Wells Is Naturally Occurring, Not the Result of Hydraulic Fracturing
In this Research & Commentary, Policy Analyst Tim Benson writes about a new study published in the journal Groundwater,in whichresearchers at the University of Texas-Austin and the University of Michigan found the methane in wells in North Texas is most likely naturally occurring and not the cause of hydraulic fracturing. The researchers analyzed the methane concentrations of 509 samples taken from more than 450 wells in 12 separate counties across the Barnett Shale, with special attention given to Hood and Parker Counties. The region became a locus in the hydraulic fracturing debate when a local landowner was filmed lighting his hose on fire in a scene appearing in the agitprop documentary Gasland Part II. “We show,” the study states, “that the overall body of evidence, that is, sampling results aided by earlier observations, strongly suggests a natural origin for the dissolved methane in the Parker-Hood cluster.” Read more
Budget & Tax
Research & Commentary: Solution for Illinois Pension Crisis Is Closer than You Think
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines a proposed pension reform plan in Illinois that relies on a model already existing in the state. It would implement a defined-contribution plan for new state workers. “This proposal is a first step toward substantive reforms that can cut costs and manage future pension liabilities while protecting existing benefits for public employees. Defined-contribution plans, which are used extensively in the private sector, would allow the state to lower its pension costs and give employees greater control over their retirement plans,” Glans wrote. Read more
Education
Research & Commentary: North Carolina Should Establish Special-Needs ESA
In this Research & Commentary, Policy Analyst Tim Benson writes about a state budget bill currently making its way through the North Carolina Senate that would provide funding for a limited education savings account (ESA) program. The Personal Education Savings Accounts Program would be available to students with disabilities, children in foster care, and to children who have a parent who is on active duty in the military. If passed, the program would begin in the 2018–19 fiscal year. Under the program, ESAs could be used to pay for tuition and fees at private and parochial schools. ESA funds could also cover the costs of textbooks, tutoring services, educational therapies, and transportation. Additionally, the ESAs could be used to pay for the fees required to take national standardized achievement tests, such as the SAT and ACT. The maximum scholarship amount for an eligible student would be $9,000, and all leftover funds could be rolled over for use in the following school year. However, the program is only budgeted for a $1 million appropriation, which means only 111 students could be funded if each is given the maximum scholarship allotment. Read more
From Our Free-Market Friends
Addressing Concerns with Congestion Pricing
In a paper by Tracy C. Miller, Michael Wilt, Thomas Savidge, and Ted Bolema, produced by the Mercatus Center, the authors rebut some of the common concerns expressed about congestion pricing. According to the paper, traffic congestion is an issue that has worsened over time. Governments have made unsuccessful attempts to alleviate congestion. Congestion pricing (also called variable tolls) can solve the problem by raising tolls during peak driving times, encouraging drivers to drive at non-peak times. The Mercatus Center’s research addresses privacy and equity concerns with congestion pricing and concludes that it may be an effective policy solution. Read more
