Earlier today, I did a round-up of the “in the box” recommendations that the Stephen Group, the consultant hired by the Arkansas Health Reform Task Force, made this morning for tweaks and adjustments to the private option. These were all ideas that could plausibly be approved by the Obama administration.

But the Stephen Group also made “out of the box” recommendations — possible avenues to explore in 2017 under a different administration. They don’t come out and say it, but what they mean is a Republican administration. 


Reading between the lines, it’s clear that the Stephen Group has been fielding a lot of starry-eyed pitches from GOP lawmakers who want to push the Medicaid program to more cozily comport with Republican talking points. The report mentions that legislators hoped to move “away from the notion of open-ended entitlements and toward moving welfare benefits for the able-bodied to transitional tools to encourage low-income individuals to get the services they need to advance in the workforce.” A number of Task Force members “expressed a belief that any welfare benefit for able-bodied adults must be conditioned on the idea that work, or actively seeking work, is an essential condition of receiving benefits.” And so on. (“Personal responsibility” and “ladder of opportunity” were frequently mentioned buzzwords during today’s meeting at the Capitol.) 

These GOP dreams, however, are limited by what the federal government is willing to approve (remember, it’s almost all federal money funding this program). But what if someone else was in charge? Negotiating with the Obama administration, the state has already managed to turn Medicaid expansion into the “private option,” with requests for more conservative bells and whistles in the works. Perhaps under a President Rubio, the thinking goes, the state could take things even further. 


Nicholas Bagley of the Incidental Economist wrote about the Arkansas private option a week ago and mentioned the possibility of GOP lawmakers and officials — who have used their leverage on Medicaid expansion to make the program incrementally more Republican — might look to squeeze even harder if a future Republican administration gives even more flexibility: 

In the hands of president who’s hostile to the ACA, waivers could become an instrument for watering down the substantive ACA provisions in states that bridle at their perceived excesses. Complaints about unrealistic assumptions in waiver applications could be brushed aside as political sniping: if President Obama looked the other way for the Medicaid expansion, why can’t President Rubio do the same for the rest of the ACA?

Perhaps tellingly, the state that’s expressed the most concrete interest in §1332 waivers is … Arkansas. “Our hope is that we can get flexibility with the Obama administration,” said one Arkansas official. “But if we can’t get the flexibility that we want, we believe that a Republican administration would be a lot more flexible.” Indeed.

It’s not as simple as federal agencies waving a magic wand under a GOP administration. There are legal limits to what the Secretary of Health and Human Services can change, allow, or waive — and radical changes to benefits or eligibility could lead to a lawsuit. That said, there is little doubt that federal agencies would be very different under a Republican administration and it’s at least possible that they could seek to allow states to bend Medicaid rules even further. 


So what sorts of things might Arkansas Republicans ask a Republican administration for? Here are the big “out of the box” recommendations from the Stephen Group (again, to be clear, these are non-starters today, but could become relevant if the White House goes red): 

Work requirements
. This is the holy grail for Republican lawmakers. Under the banner of “personal responsibility,” almost any GOP-led discussion of Medicaid reform begins with the suggestion of cutting off benefits for unemployed people. The feds have been crystal clear that this is a line in the sand: states cannot make having a job a requirement of Medicaid eligibility (Medicaid, after all, is a health program). What states can do, and what the Stephen Group suggests for Arkansas, is work encouragement — incentivizing beneficiaries to participate in job training programs, for example. But what if a new presidential administration was more friendly to the idea of work requirements? If so, the Stephen Group suggests, the state could pursue a waiver to make 20 hours of work per week a requirement for any private option beneficiary (or 35 hours combined for two-parent families). The medically frail, or those actively taking part in an active job search or training, would be exempt. 

Such a program, if implemented, could potentially take health insurance away from tens of thousands of unemployed or underemployed Arkansans and would create massive bureaucratic complexity and administrative burden for beneficiaries and for state agencies.  Meanwhile, there’s no evidence that the move would significantly increase employment

Sliding-scale premiums. The “in the box” recommendations include small conditional premiums that beneficiaries only have to pay if they fail to comply with wellness and job training requirements. The “out of the box” approach imagines a more aggressive scenario:

* Beneficiaries who make between 100 to 138 percent of the federal poverty level would pay $20 per month 
* Beneficiaries who make between 74 to 99 percent of FPL would pay $10 per month. 
* Beneficiaries who make between 50-74 percent of FPL would pay $5 per month. 


Anyone who didn’t pay would be disenrolled. 

Note that this adds another element of means testing — again, making enrollees jump through additional hoops that will create bureaucratic burdens for state agencies with little to no benefit. But good for talking points (“personal responsibility”!). 

Limit benefits to force beneficiaries to climb the “ladder of opportunity.” This one is vague, but the basic idea is that if the program has built-in mechanisms to kick people off, it will “encourage able-bodied adults to advance in their career.” The benefit would be limited to a set number of years (perhaps 2, perhaps 5). At that point, beneficiaries would be booted from the program, lose their health insurance, and be left to fend for themselves. The reasoning here: Many Republicans believe that beneficiaries are choosing not to pursue better paying jobs because they want to stay on the private option. So if only they could be released from the “welfare trap,” they could “advance in their career.” 

All three of these complicated new wrinkles would threaten access to care for beneficiaries. It’s difficult to predict how far a Republican administration in the White House would actually seek to go in bending the Medicaid rules, but the stakes are high: Arkansas would surely not be alone among red states seeking to re-shape the Medicaid program to their liking. That could lead to an ugly bargain — the expansion of Medicaid in exchange for changes that undercut the goals of the program.