REMAINS OPTIMISTIC: Speaker of the House Matthew Shepherd. (file photo) BRIAN CHILSON

Two days after a federal judge halted Arkansas’s first-in-the-nation work requirement for certain Medicaid beneficiaries, the state House of Representatives rejected the entire Medicaid budget by a large margin on Friday.

Senate Bill 99 will be back for another vote early next week, House Speaker Matthew Shepherd said. The speaker said he was “still optimistic about the prospects of … getting it passed in the next few days,” calling it “the right thing to do.”

“We’ve been here before,” Shepherd said.

Governor Hutchinson also remained confident. “Some House members still have questions regarding [the] work requirement ruling,” he said in an emailed statement. “That’s to be expected. I expect a second vote next week, and I trust the bill will pass.”

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In previous legislative sessions, passage of the state Medicaid budget often has required multiple votes. The appropriation has faced opposition from conservative Republican lawmakers unhappy with the state’s expansion of Medicaid, which now provides health insurance to some 235,000 low-income adults.

In 2018, however, the appropriation passed the legislature with little drama. Skeptical lawmakers were won over in part because Hutchinson obtained a waiver from the Trump administration allowing the state to establish an experimental work requirement for most beneficiaries ages 19-49. Over 18,000 people lost coverage last year for not reporting their work hours to the state Department of Human Services.

U.S District Judge James E. Boasberg on Wednesday struck down the Arkansas work rule. In his opinion, the judge said Trump administration officials overseeing Medicaid had not “grappled with [public] comments” that warned the work requirement “would lead a substantial number of Arkansas residents to be disenrolled from Medicaid.”

That meant the federal officials’ decision to authorize the work requirement experiment was “arbitrary and capricious,” Boasberg wrote.

The judge’s order on Wednesday came only minutes after the Medicaid appropriation passed the state Senate with no votes to spare. In Arkansas, budget bills require a three-fourths supermajority in both chambers.

The governor said Thursday he has urged the Trump administration to appeal the ruling. As of 5 p.m. Friday, the federal Justice Department had not indicated whether it will do so. (Arkansas is an intervenor in the lawsuit, which means it lacks standing to file an appeal directly, the governor said.)

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On Friday, the Medicaid budget bill received only 52 votes in the House, far short of the 75-vote threshold needed for passage. Twenty-eight members, all Republicans, voted “no.” Another 20 members either voted “present” or did not vote.

Rep. Grant Hodges (R-Rogers) was among those who voted against the bill. He quoted a press release from the governor from last year, shortly after the work requirement was approved by the Trump administration: ” ‘The fact is, we would not have been able to sustain Medicaid without the type of reform included in the [work requirement] waiver’ — which as of today, as we are voting on this bill, we do not have,” Hodges said.

If the governor’s statement at the time was true, he asked, “then aren’t we being asked today to vote on an appropriation for an unsustainable Medicaid program?

“My issue really is that we are being asked to vote on a more than $8 billion Medicaid budget less than 48 hours after a court decision that has a pretty significant effect on the Medicaid budget,” Hodges said.

The bulk of the $8 billion Medicaid appropriation is federal money. Medicaid is a partnership between the federal government and the states. In Arkansas, the federal government pays for 70 percent of Medicaid costs for the “traditional” part of the program, which covers children, the elderly and the disabled. The state picks up the other 30 percent of costs.

For the expansion population — low-income adults — the federal government paid for 100 percent of costs for the first several years of the program. The match rate is now 93 percent and will decline to 90 percent in 2020, where it will remain. That means states only pay 10 percent of costs for Arkansas Works beneficiaries.

Rep. Deborah Ferguson (D-West Memphis), who voted for the bill, said the state has “actually made money on the Arkansas Works program,” because of the better match rate.

“A lot of those groups we were getting a 70/30 [match] on, we actually moved to 100 percent reimbursement from the federal government. … We’re owing money now, but we have been getting money on the front end to pay for this,” she said.

Rep. Lane Jean (R-Magnolia), who presented the bill to the House, said the appropriation included $1.3 billion in state general revenue. Most of that amount goes toward traditional Medicaid groups, not the expansion group. Jean said the expansion population has cost the state about $135 million for the current fiscal year, which ends in July.

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Jean said he hoped the work requirement would be upheld in court, but he said the appropriation bill would sufficiently fund state Medicaid either way. If the work requirement isn’t reinstated, he said, “it’s going to be about $20 million more dollars that’s going to cost us. … We have excess appropriations to take care of it.” Jean said the $20 million figure was cited previously by state officials in a Joint Budget Committee hearing.

This reporting is made possible in part by a yearlong fellowship sponsored by the Association of Health Care Journalists and supported by The Commonwealth Fund. It is published here courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan project dedicated to producing journalism that matters to Arkansans. Find out more at arknews.org.