Governor Sanders announces the beginning of real Medicaid reform
This morning, Governor Sarah Sanders made yet another impressive policy announcement: her administration will implement a revised work requirement for able-bodied adults in the state’s ObamaCare expansion program.
Real Medicaid reform is long overdue. Currently, as we’ve noted, more than 1 in 3 Arkansans are trapped in the Medicaid program. The vast majority of the growth we’ve seen in recent years has been driven by the ObamaCare expansion population.
And to no surprise, this enrollment explosion has resulted in massive spending increases. Indeed, Arkansas now spends roughly half of what the state income tax brings in on Medicaid alone.
Suffice it to say, the status quo is completely unacceptable. Thankfully, Governor Sanders recognizes this and intends to chart a new course.
ARKANSAS MEDICAID QUICK FACTS
- Arkansas has 1,143,219 Medicaid dependents (345,085 of these are ObamaCare expansion dependents)
- Taxpayers spend $7.6 billion annually on Arkansas Medicaid ($2.4 billion for ObamaCare expansion)
- Per person monthly costs are $559.53 for Medicaid fee-for-service enrollees vs. $728.46 for ObamaCare expansion enrollees in "private" qualified health plans
- There are 98,000 open jobs in Arkansas
- More than half of Arkansas ObamaCare dependents do not work at all
- There are 422,112 potentially ineligible enrollees across the whole Medicaid program (128,881 for expansion)
HOW THE WORK REQUIREMENT WILL WORK
Currently, the vast majority of Arkansas ObamaCare enrollees receive “private” health plans or qualified health plans (QHPs). This was part of the program’s original design, crafted by state legislators and former Democrat Governor Mike Beebe.
But, unsurprisingly, these plans are significantly more expensive for taxpayers than regular coverage.
Governor Sanders's plan seeks to address this and reduce costs. Here’s how:
- Enrollees in the ObamaCare expansion program (able-bodied, working-age adults) would still receive the private plans initially.
- Enrollees will be required to work, volunteer, or attend school in order to keep the enhanced coverage.
- Those who fail to meet the work requirement will be transitioned into conventional fee-for-service Medicaid coverage.
5 REASONS WHY IT’S GOOD POLICY
Medicaid is unfortunately heavily controlled by the federal government. Virtually any changes that affect benefits, costs, or enrollment must be approved by the Feds. That means the current federal administration–no friend of states or of taxpayers–has final say.
This largely takes broader Medicaid reform (like a universal work requirement, premiums, and other conservative reforms) off the table, at least for now. But it doesn’t mean we can’t start chipping away at the root causes of our Medicaid crisis. And that’s exactly what the governor’s plan does.
1. The governor’s plan rejects the status quo. It’s a definitive statement to the people of Arkansas–and the Biden administration for that matter–that fundamental Medicaid reform is needed. While we can’t quite yet get the transformational changes we need, this is a great first step towards broader reform and a signal that Governor Sanders is serious about solving our Medicaid crisis.
2. The governor’s plan will provide much needed relief to taxpayers, freeing up more room for income tax reform. The phaseout of the state income is–as it should be–a top priority for Governor Sanders and for the legislature. But as we have noted, there is no prospect of deep income tax reform or repeal without Medicaid reform. Period. Medicaid consumes too much of our budget. If we want real income tax reform, it begins with spending reform, which begins with Medicaid reform.
3. The governor’s plan will realign incentives in a logical way. Right now, able-bodied adults in the ObamaCare expansion program get Cadillac coverage at no cost to them but at large cost to the taxpayers. They do not have to do anything to maintain coverage, other than keeping their incomes down. It’s quite literally a dependency trap and a reward for not working. The governor’s plan flips this paradigm on its head: by requiring work in order to get Cadillac coverage, these able-bodied enrollees will now have an incentive to better themselves if they want a better plan.
4. The governor’s plan is a step towards finally prioritizing the truly needy once again. One of the craziest, most offensive things about the original “private” coverage model is that it gives Cadillac coverage to able-bodied, working-age adults while low-income kids, pregnant women, and the disabled are stuck in the broken Medicaid system with fewer benefits and far less access to medical providers. It’s immoral and wrong.
5. The governor’s plan will prioritize work. Based on the most recent data we have, most Arkansas ObamaCare enrollees do not work at all. The governor seeks to shift this paradigm as well. Although we do not have the flexibility we need from the federal government to do a universal work requirement with real teeth, this is a substantive step in the right direction. And hopefully, by connecting enrollees with work training, workforce services, and education opportunities, some Arkansans will be inspired to choose work over welfare.
If and when we can pursue a universal work requirement for able-bodied adults in Medicaid again, we should. It worked very well before; it would work well again. But in the meantime, the governor’s plan is an innovative move in the right direction.
Arkansans deserve a safety net that prioritizes the truly needy; a system that provides help for those with nowhere else to turn, but pushes those who can work towards the workforce.
We still have a ways to go to get there, but thanks to Governor Sanders’s leadership, we’re one step closer.
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