HUTCHINSON: "The block-grant authority is something that we’ve asked for." Brian Chilson

Governor Asa Hutchinson released a statement applauding the Trump administration’s plan, announced today, to allow states to convert some Medicaid funding to block grants, which would slash funding for low-income adults covered by the program.

Hutchinson made no specific commitments on what the state will do next. “We will immediately begin to review the specific model and guidelines that the Trump administration issued today to see how this would fit into an Arkansas-type approach for providing health care to the expanded Medicaid population,” he said.

Advertisement

Hutchinson pointed out that his administration has asked the White House for options to implement block grants, and thanked Trump administration officials for giving states this option. “The announcement today by the Trump administration giving states the opportunity to apply for a block grant is good news for everyone who believes the states should have more flexibility in managing one of the most expensive items in a state’s budget and managing the delivery of health care services to the most vulnerable citizens,” Hutchinson said in his prepared statement.

The governor noted that the General Assembly has already passed legislation authorizing the state to pursue a block grant waiver if it was authorized by the federal government. That said, as I pointed out earlier, the appropriation for the entire Medicaid budget, under a quirk in the Arkansas constitution, requires 75-percent approval in both houses of the legislature. During debates over the Medicaid expansion itself, that became the de facto supermajority threshold for the policy. Will that precedent hold? It could be a steep climb to get to 75 percent approval for a policy that will cut tens of millions of dollars of federal funding directed at the state’s poorest citizens from the state budget. But enforcing the supermajority requirement in the prior legislative fights demanded a rump group of Republicans threatening to block the Medicaid budget unless they got their way. Just enough of those aginners always caved in the end, and Medicaid expansion survived. Unclear whether opponents of the block grant would use those same hardball tactics or not.

Advertisement

The Trump administration proposal, which I described in detail this morning, would cap the amount of federal Medicaid funding the state receives for non-disabled adults aged 19-64, rather than receive an open-ended federal match for actual expenditures for that population. Trump’s proposed block grants would be available for those covered by the Affordable Care Act’s Medicaid expansion, which provides health insurance for hundreds of thousands of Arkansans who make less than 138 percent of the federal poverty level (that’s around $17,600 for an individual or $36,000 for a family of four). The capped payments under the block grant would replace the current rules for this group, under which the federal government pays for 90 percent of the cost of this population, with the state picking up the other 10 percent.

These block grant waivers will only be available to states for the population newly covered under the ACA’s Medicaid expansion, not for others covered by the traditional Medicaid program, such as disabled people, low-income kids, low-income pregnant women, and elderly people in long-term care.

Advertisement

The Trump administration, like Hutchinson, trumpets the block grants as a move for “flexibility” and “efficiency.” In practice, they are massive cuts to funding for health insurance for low-income people. It’s a frontal assault on the ACA’s expansion of Medicaid coverage.

While the loss of federal dollars could blow a hole in state budgets, the Trump administration initiative would give states new tools to implement cuts and limits to services and slash eligibility. State Medicaid programs could apply for new authority to limit what FDA-approved drugs were covered, cut reimbursement payments to Medicaid providers, impose cost-sharing and premiums on poor beneficiaries and kick them off coverage if they fail to pay, impose asset tests, impose more onerous reporting requirements and kick people off more easily if they fail to comply, and eliminate retroactive eligibility and presumptive eligibility (which ensures that an eligible person is covered if they show up for an emergency, even if they haven’t signed up for Medicaid yet). If states slashed the rolls and services enough, they could even get a fraction of the money saved for the feds back; if the state required more than its capped amount to provide required services for the covered population, it would be on the hook for the remainder from the state budget. In other words, a potential catastrophe if costs ran higher than expected or there was an economic downturn.

Patient advocacy and provider groups are already expressing fierce opposition to Trump’s plan, which is sure to be challenged in court. Here’s Hutchinson’s statement in full:

The announcement today by the Trump administration giving states the opportunity to apply for a block grant is good news for everyone who believes the states should have more flexibility in managing one of the most expensive items in a state’s budget and managing the delivery of health care services to the most vulnerable citizens.

The block-grant authority is something that we’ve asked for, and I applaud CMS Administrator Seema Verma and Health and Human Services Secretary Alex Azar for leaning forward to recognize that the states can manage these types of health care programs in an effective way.

At this point, we have the Arkansas Works waiver. But we will immediately begin to review the specific model and guidelines that the Trump administration issued today to see how this would fit into an Arkansas-type approach for providing health care to the expanded Medicaid population. It should be noted that the Arkansas General Assembly has already passed legislation that directs the state of Arkansas to pursue a block-grant waiver once it is authorized by the federal government. I look forward to working with legislators as well as the Trump administration on the next steps for Arkansas.