UNDER BUDGET: Governor Asa Hutchinson says lower enrollment in Arkansas Works is mostly due to an improved economy. BRIAN CHILSON

On Friday afternoon, Governor Hutchinson met with reporters to emphasize the news that the state’s total Medicaid spending remained flat from fiscal year 2017 to FY 2018. The numbers were released by the Arkansas Department of Human Services earlier in the week.

Combined state and federal spending on Medicaid in Arkansas was $7.105 billion in FY 2018, which ended June 30. That’s $22 million less than the $7.127 billion spent in FY 2017. In Arkansas, the federal government pays for about three-quarters of the total cost of Medicaid.

Though the $22 million reduction is tiny relative to the overall program — effectively a zero percent change — it amounts to a significant savings when compared to projected growth figures. That’s because the cost of Medicaid, and most other health care costs, typically grows year over year at a rate greater than regular inflation. Holding Medicaid expenditures flat is an unusual accomplishment for a state and goes a long ways toward Hutchinson’s goal of achieving $835 million in Medicaid savings over a five-year period.

Hutchinson said Friday that this was “the only time in Arkansas history” Medicaid spending hasn’t increased from one year to the next. “That’s a significant fact that I think bears underscoring,” he said.

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It is less clear, however, whether the reduction in spending has come at the expense of benefits for some Arkansans. Over the past year and a half, the state’s Medicaid rolls have been reduced by about 60,000 people, most of whom were pared from the “expansion” population of low-income adults who gained coverage under the Affordable Care Act. In Arkansas, the Medicaid expansion program is called Arkansas Works. Enrollment in “traditional” Medicaid dipped slightly as well, though to a far lesser extent. (Traditional Medicaid includes children covered by ARKids, elderly people, the disabled and many other categories.)

Total Arkansas Medicaid enrollment stood at around 928,000 as of July 1, according to federal figures. Of those, about 271,000 were in Arkansas Works. In January 2017, Arkansas Works enrollment peaked at around 330,000.

The decline in enrollment accounts for most of the total Medicaid savings touted by the governor (around 55 percent), according to a letter sent to Hutchinson from DHS Director Cindy Gillespie earlier in the week. The remaining portion is due to “transformation” efforts attempting to impose more fiscal discipline on especially profligate portions of the sprawling Medicaid program.

Hutchinson and Gillespie said the enrollment reduction is the result of an improving economy and efforts by DHS to scrub the rolls of people who have moved out of state or are otherwise ineligible.

“I would emphasize that this is not a change in services. This is simply the result of people that are working,” Hutchinson said. Because Arkansas Works is open only to those below a certain income level, a higher-paying job might cause a beneficiary to lose eligibility. “If they got a better job and they just don’t bother telling us about it and they no longer qualify, that’s a good thing, because nobody’s losing services. If it’s because their spouse got insurance and they no longer need Arkansas Works, then that’s a good thing as well. … You have to look at the reason for it,” he said.

Hutchinson suggested that Arkansas Works enrollment from 18 months ago was inflated by inefficient management of the program. “Arkansas Works numbers got up to 330,000, when the original prediction was around 250,000,” he said, referencing projections made in 2013, when Arkansas was first considering expanding Medicaid. “I think you’re seeing numbers now that are where they should be based on the economy that we have and based on the management we have.”

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Whatever is behind the drop in enrollment in the past year and a half, it is not directly due to the new work requirement for certain Arkansas Works beneficiaries, which took effect in June. Eventually, the work requirement will likely cause some people to lose coverage: If beneficiaries fail to report 80 hours of “work activities” per month for any three months in the calendar year, their insurance will be terminated and they’ll be locked out of the program for the rest of that calendar year. However, such closures wouldn’t show up until September at the earliest.

The first month of data available shows that only a small fraction of Arkansas Works enrollees reported work hours in June — about two percent. About 69 percent reported some status that made them exempt from reporting, which leaves about 30 percent that could be in danger of losing coverage in the months ahead. Most Arkansas Works beneficiaries are already thought to be working at least 80 hours per month. However, the compliance burden of reporting hours — beneficiaries must create an account on a DHS website and log their work activities every month — creates barriers that could threaten coverage even for those workers.