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For Immediate Release 07.23.2021

Transcript of Governor Asa Hutchinson’s ARHOME Address to the American Enterprise Institute

LITTLE ROCK – In a major address to the American Enterprise Institute today, Governor Asa Hutchinson explained Arkansas’s proposed Medicaid program, a Section 1115 Demonstration waiver called the Arkansas Health and Opportunity for Me (ARHOME) program the state has presented for approval to the Biden administration.

“Let me emphasize that this is not just another Medicaid waiver that seeks to add coverage or deliver health care in a slightly different way,” Governor Hutchinson said in his speech. “It goes directly to the linkage between poverty and poor health outcomes and, in many instances, premature death.”

The transcript of his speech:

Thank You to the American Enterprise Institute. 

It is good to be here with a friendly audience after six town hall meetings last week on COVID and vaccinations.

And let me express appreciation to Joe Antos of AEI and Stuart Butler at Brookings for planning and leading this event.

Joe and Stuart have seen it all in terms of health care debate and policy.

They have been engaged since the late ’70s when HHS had a different name, HEW. They have seen the intraparty feud between President Carter and Senator Ted Kennedy on maternal health insurance;

They watched as HillaryCare ran into a couple named Harry and Louise ... and a skeptical public and Senate.

They saw health care policy dramatically change with the Affordable Care Act under President Obama;

And now the debate continues as the Biden Administration weighs the conflict between assuring access to health care and the rapidly escalating costs that drive inflation and the federal budget deficit.

As they say in the Farmers Insurance commercial, Joe and Stuart “know a thing or two because they have seen a thing or two.” And there is still more to come.

The future of health care is what brings me here today.

But first, let me spend a little more time with the perspective of history.

In April of 1977, when President Carter sent his health care legislation to the Congress, the U.S. spent $173 billion on health care, about 8 percent of our Gross Domestic Product.

Today, we spend $4 trillion on health care, nearly 18 percent of our GDP.

This increased investment raises the question – are we getting our money’s worth?

History also reminds us of the importance of employer-based health insurance coverage.

At the end of World War II, employers began to offer health insurance coverage on a large scale to recruit workers when they could not offer higher wages. The decision during the Eisenhower Administration to keep employer contributions for health insurance tax deductible was a key to keeping more Americans covered by health insurance.

Today, employer-sponsored insurance is the largest source of health care for Americans. In my view, this is important, and the federal government should never be the sole provider of health care to Americans. If that happens, quality of care will decline.

Besides employer-sponsored health care, another source of health care for Americans is Medicare. The 65 million senior citizens and individuals with disabilities reliant on Medicare should not be forgotten as we look at the future. And specifically, we need to address the financial instability of the Medicare Hospital Insurance Trust Fund projected in the coming years. In fact, the reality of pending insolvency should be of the highest concern because it is projected to be insolvent within the next five years. While focusing on the COVID-19 pandemic is our top health concern, we must also be prepared to address the financial uncertainty of Medicare for our senior citizens.

Our family members who depend upon Medicare are counting on leaders to set aside their political differences to build the needed coalitions and working groups to solve the Trust Fund shortfall.

As the preacher once said in terms of decisions of this life: “There is a payday, someday.” That message applies to Medicare, if we don’t solve its current financial shortfall.

The last area of debate is probably the most important. And that is the principles we should follow in health care policy.

There are some in Congress who want to federalize our entire health-insurance system under a grandiose plan controlled by a left-leaning bureaucracy. Yes, their voices may be loud, but they must ultimately fail because the majority of Americans fundamentally know there is a limit as to how much the federal government can take from the pockets of workers, employers, and consumers. The other side of the debate is what I favor. We must return to the principles of true market competition, individual liberty and responsibility, and the power of consumer choice. These are the virtues that improve quality and lower costs. Solving the problem will require leadership to put the public interest ahead of our current political divide.

Now, let me focus on the reason for my presentation today.

Arkansas has submitted a new Section 1115 Demonstration waiver named the Arkansas Health and Opportunity for Me program. We are branding it the ARHOME program. Let me emphasize that this is not just another Medicaid waiver that seeks to add coverage or deliver health care in a slightly different way. It goes directly to the linkage between poverty and poor health outcomes and, in many instances, premature death.

Some background is important as we look at this waiver application.

Prior to 2013, Arkansas severely limited Medicaid coverage for able-bodied adults. In fact, it was the lowest cutoff for Medicaid eligibility in the nation. In 2013, a parent with a dependent child with income above 17 percent FPL (federal poverty level) was not eligible for Medicaid. In Arkansas, that equates to an annual income of about $3,000 for a household of two.

An able-bodied adult less than 65 years of age without a dependent child had no pathway to Medicaid eligibility.

But the good news is that in 2013, Arkansas made the decision to expand Medicaid coverage to able bodied adults who make less than 138 percent of FPL. This decision increased health care coverage and led to a 12.3 percent  drop in the state’s uninsured rate – from 22.5 percent in 2013 to 10.2 percent  in 2016 – the second-largest decline in the nation.

When I became governor in 2015, there was a debate, but Arkansas continued with the expanded coverage.

That is the good news, but as Paul Harvey would say, “Now for the rest of the story.”

Despite the gains in health-insurance coverage, Arkansas continues to struggle to improve its rankings in improved health outcomes.

According to the most recently released America’s Health Ranking Annual Report, Arkansas ranks 48th overall among the states in health outcomes. While improvements in several areas have been made, Arkansas has not kept pace with other states. Here is the central point: Coverage itself is not enough to achieve the improvements in health care status that the people of Arkansas expect.

We want a new approach. We want more for the money. We are asking our health plans to do more; our hospitals to do more; and our enrollees to do more.

In addition to providing health care insurance, ARHOME will focus on maternal health, mental health and addiction services, and improved delivery of health care in a rural state.

For example, we intend to concentrate on the health needs of women with high-risk pregnancies, young adults who still suffer from childhood trauma, and people with mental illness – too many of them remain in the shadows and on the margins because of fear, discrimination, or the stigma of their illness.

We cannot just wait for them to come through the door of the hospital or doctor’s offices – we must go out to them and meet them where they are. (Experience with vaccinations – the rural areas have the lowest vaccination rates.)

ARHOME creates three new types of community bridge organizations that we call Life360 HOMES – one to serve women with high-risk pregnancies; one with a particular emphasis on serving people with behavioral health needs; one to serve young adults most at risk of long-term poverty, and the ex-offender population and foster children who age out.

Each of these Life360 Homes will be anchored by community hospitals.

Arkansas is fortunate to have many excellent medical facilities. Many of these are faith-based.  Many are small community hospitals that are struggling to provide the medical care needed in the community and to attract medical providers.

ARHOME is a challenge and an invitation to our community hospitals to increase their services.  Their doors are open, we invite them to open them even wider. They are mission-driven; and we ask them to expand their mission.

But we are not asking them to expand their mission on their own. ARHOME proposes to pay hospitals to recruit and train coaches or peer specialists, or to partner with other community organizations to engage individuals one-on-one.

Many in rural areas have no access to behavioral health services because of a lack of licensed professionals.

ARHOME will help expand the pool of qualified mental health professionals and fill the gaps for better health outcomes in rural America.

ARHOME will also engage individuals to improve job skills and to be ready for work. While this waiver will not include a strict work requirement, we can incentivize education, work, and community service.

Work and employment are shared values for our nation. And they are keys to ultimately improved health outcomes and to escape poverty.

For example, in a March 2016 paper from the Centers on Budget Policy Priorities, the authors state that “adults in poverty are significantly better off if they get a job, work more hours, or receive a wage hike.”

The dignity of work is a shared core American value as expressed by the Center for American Progress: “Work itself is fundamental to how human beings realize their destiny in this world.”

The Center goes on to say: “Work, whether a paid job or unpaid work in the home, as a caregiver, or in a volunteer capacity is fundamental to human nature and its expression. This connection between work and human dignity lies at the core of progressive values.”

More recently, The American Enterprise Institute in its April 2020 paper, “Health and Poverty, The Case for Work,” expresses a similar perspective: “ … work is essential to health and well-being, especially for prime-age people who find themselves poor. By ignoring the importance of employment, government policies do a disservice to the people they purport to serve.”

We see that policy groups at both ends of the political spectrum agree that work is not just an American value, but it is a human need and purpose.

Everyone also agrees that there can be a disincentive to work if the increase in income results in a reduction in benefits, the so-called Medicaid “benefit cliff.”

One of the purposes of ARHOME is to offer solutions to this benefit cliff. We don’t want to incentivize anyone not to work or move up the income ladder.

By using premiums, copayments, and incentives to make Medicaid more closely resemble the private insurance market, ARHOME will create a bridge from public insurance coverage, over the “benefit cliff,” to private insurance coverage.

Individuals who begin their coverage in Medicaid and increase their income above the Medicaid eligibility limit will be able to stay with the same plan, with the same benefits, and the same provider network. Individuals won’t lose their doctor because their source of financial assistance changed.

That is what premium assistance makes possible.

ARHOME is also a challenge to the health insurance plans to not only do more of what they do, but to be more.

The nature of a health insurance company is to provide access to care and protect against unforeseen unpredictable financial costs.

ARHOME challenges the health plans to provide incentives to encourage members to do what is in their own best health and economic interest.

With this new mandate, the health plans will have a menu of incentive options for their members that will encourage healthy behavior, increase their employment, education, and training so they can lift themselves up to improved health and out of poverty.

There are two questions that might be raised to this initiative and waiver application.

First, is it consistent with the purposes of Medicaid? The answer is a resounding yes.

Since its beginning, Medicaid has been described as an antipoverty program. But at its origins, it served populations that were outside the workforce – the elderly, people with disabilities, children, and low-income mothers whose eligibility was tied to the former Aid to Families with Dependent Children program.

In other words, Medicaid was reserved for different groups of individuals who, at the time, likely could not acquire health-insurance coverage on their own because they were not employed or were not considered to be employable.

The original Medicaid program made no reference to the newly eligible adult population that the Affordable Care Act created because this group of people, who are employable, was excluded by definition. In fact, the ACA should be used as a means of helping low-income workers improve their health, and increase their skills and their work opportunities.

So yes, the waiver is consistent with the purpose of Medicaid – a safety net and to help people move out of poverty.

The second question that might be asked is whether this waiver advances conservative principles?

Again, it is conservative to let the states innovate and to recognize the unique challenges of each area of our great country.

Because Medicaid is a grant to a state, each state participates in determining the purposes and objectives for its use.

States must not be reduced to mere agents of the federal government and must be allowed to exercise a fair and real share in decision making.

And it is conservative to use the private sector to do what government does not do well:  to coordinate care, be accountable for outcomes, and incentivize lifestyles that lead to improved health.

And finally, it is conservative to use federal dollars in the most efficient way possible with oversight and accountability.

Under ARHOME, there will be quarterly program monitoring by a joint legislative-executive oversight panel.

The health care plan that we seek to build in Arkansas is both conservative and compassionate; it is both conservative and practical; and it is both conservative and based upon common sense.

It is my hope that the Biden Administration will approve this innovative approach to health care, and that conservatives will see it as a practical means to take an expansive federal program and overlay it with the efficiency of the private sector. That it will be understood as a plan to restructure a federal program in a way that provides flexibility to the states and reinforces the historic human values of work and responsibility.

When we look at the future, we must fight to keep America Strong and Free. It is not easy, but I remember the sign in the Oval Office when Ronald Reagan was president.  It said, “It can be done.”

So when we ask if we can keep America Strong and Free, the answer is: “It can be done.”

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