Governor Hutchinson and the Arkansas Department of Human Services announced Friday that the state’s traditional Medicaid program spent $175 million less than expected in the 2017 fiscal year (which ended in June).
To state the obvious, $175 million is a lot of money. It’s about 1/8th of the state general revenue budgeted for the DHS in FY 2017. (Note, however, that the agency spent far more than that on Medicaid, because Arkansas receives billions in matching federal funds, which are not included in general revenue figures.)
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It’s a little difficult to believe the state could cut $175 million from the Medicaid budget without negatively impacting services, but we’ll have to dig into the details before drawing conclusions.
The spending reduction follows a blueprint created in 2015 by a legislative task force seeking reductions in traditional Medicaid spending. “Traditional” here means the parts of the program that existed before Obamacare expanded Medicaid to cover low-income adults (in Arkansas, the Medicaid expansion allowed for the creation of Arkansas Works, or the private option). Traditional Medicaid includes coverage for elderly people in nursing homes, some children under ARKids, developmentally disabled adults, the blind, and others.
The governor said in a statement:
“I am pleased to see the significant savings outlined in the first DHS scorecard. This report demonstrates that the reforms advanced by my Administration and the Healthcare Reform Legislative Task Force are creating real savings and slowing growth to ensure a more sustainable and efficient Medicaid program. In fact, these reforms have already resulted in tens of millions of dollars in savings to the state. I will continue to work with DHS and the state legislature to tailor a uniquely Arkansas approach to healthcare reform that is innovative, conservative and will ensure the long-term success and viability of our state’s Medicaid program.”
The governor instructed the task force to find $835 million in savings. The statement continues:
Based on that goal, the Task Force, jointly chaired by Sen. Jim Hendren and Rep. Charlie Collins, set annual savings targets in five high-cost areas of spending in Medicaid: behavioral health, developmental disabilities (excluding human development centers), long-term services and supports, pharmacy and dental (through managed care).
“It is great news for Arkansas that the two years of hard work of the Healthcare Reform Task Force have helped produce savings of over $175 million,” said Sen. Jim Hendren, Task Force co-chair. “DHS has taken the HRTF recommendations and done a fantastic job of turning them into actions that produce savings. It shows Arkansas will continue to lead the nation in innovation and responsible healthcare policy development.”
Here’s a “scorecard” from DHS created to track savings: