Press Release

Asa Arkansas's Governor

FOR IMMEDIATE RELEASE
09.22.2017

Governor Hutchinson Answers Questions About Effect of Graham-Cassidy Bill on Arkansas

LITTLE ROCK – Governor Asa Hutchinson has signed a letter in support of the Graham-Cassidy Bill that the U.S. Senate is considering as a replacement for the Affordable Care Act, known as Obamacare. 

The governor has consistently opposed any change that would shift the cost of healthcare onto the states. The block grants that are the foundation of this bill would allow Arkansas to design its own healthcare initiatives in a way that best covers and protects Arkansans. 

The Trump Administration invited Governor Hutchinson to the White House last month to meet with three other governors for discussion about the bill. His leadership on the bill has been recognized nationally. 

From Governor Hutchinson:

"My message has been consistent throughout this debate. The Affordable Care Act should be repealed and replaced with something that works, that is affordable, that continues to provide access to healthcare all the while providing a mechanism to better control costs. Most importantly, I’ve consistently stated that a replacement bill should not shift costs to the states, and I have pushed back on recent legislation that would do so. 

"Graham-Cassidy satisfies my concerns, and I believe it is a true repeal and replace bill that offers states the flexibility the governors have requested in a block grant format for some time now.

“As for some of the misinformation being circulated, Graham-Cassidy will not strip coverage from Arkansans with pre-existing conditions nor do I have any concerns with the long-term success of the program after 2026. The Graham-Cassidy bill follows the CHIP model, which Congress has consistently reauthorized since its creation 20 years ago. In fact, CHIP is up for reauthorization now and there is a bipartisan effort to do so. There is no reason to believe future Congresses and Administrations will act any differently in their approach to this new block grant program.”

The Governor's office put together this document to explain how the bill will affect Arkansas:

1. What is the Graham-Cassidy Bill?

The Graham-Cassidy bill is a true replacement to the Affordable Care Act (ACA or Obamacare) that, if passed, will provide states the flexibility through block grant funding to innovate, identify efficiencies and find cost-savings while maintaining coverage for their populations. It is the nation's best and last chance to repeal and replace the unsustainable ACA.

The Graham-Cassidy bill will repeal the individual and employer mandates established under Obamacare and return the power to regulate insurance to the states.

The Graham-Cassidy bill will also implement a more equitable approach to federal healthcare funding for ALL states.

2. If the bill becomes law, will Arkansans with pre-existing conditions be protected?

Absolutely. Throughout this debate, Governor Hutchinson has emphasized his commitment to ensuring access to affordable coverage for all Arkansans, including those with pre-existing conditions.

While Graham-Cassidy allows for a state to waive certain provisions under the ACA, the statute clearly states that a Governor seeking such a waiver would have to show an alternative plan to provide access to adequate and affordable coverage for those with pre-existing conditions.

3. What would it mean for Arkansas?

If Graham-Cassidy passes: Arkansas Works would continue, as would the reforms the state is working to implement (lowering the income threshold and instituting work requirements) in the program. Between now and March 31, 2019, the date in which the block grant application would be due, the state would begin working with the provider community, healthcare advocates, the patient community, insurance carriers, and state officials to design a plan that works well for Arkansas. It’s important that the state get it right.

It will also allow the state to continue to identify and achieve cost-savings being pursued under current reform efforts. For example, the Governor and the Healthcare Legislative Task Force, along with DHS, have developed a plan to create $835 million in savings over a 5-year period. The state is well on its way to that goal.

4. Will Arkansas lose federal funds under Graham-Cassidy?

Graham-Cassidy puts federal spending on a budget—a realistic, manageable and achievable budget. This sort of discipline is long overdue in Washington and the states must be a partner in making our health care programs more sustainable.

Federal spending will grow at a slower rate under Graham-Cassidy than under current law, but states will have greater flexibility to manage the new growth rates and will no longer be required to pay a state match for the Medicaid expansion population.

The level of funding that will be provided to Arkansas is sufficient, and the state already has experience successfully operating healthcare programs under budget caps. In fact, the Arkansas Works program includes budget neutrality caps, and the Children’s Health Insurance Program (CHIP) is based on capped allotments. Graham-Cassidy has a similar structure.

It’s important to note that the block grants under Graham-Cassidy represent 95% of the spending projections under current law (ACA) for private insurance subsidies and Medicaid expansion, nationally. Therefore, Arkansas can maintain high coverage levels under this plan.

5. Is there a state match under Graham-Cassidy like there is under the ACA?

There is no state match for Medicaid expansion required under the Graham-Cassidy bill. Under Obamacare, Arkansas currently has a 5 percent match ($100 million) for this population that the state pays to the federal government. That match will increase to 10 percent ($200 million) a year in the coming years under the current law.

Graham-Cassidy does not require a state match for the block grant funding that will replace the ACA’s expansion and private insurance subsidy system. In Arkansas, this will free up more than one billion dollars in general revenue between 2020 and 2026.

6. If this bill becomes law, will Arkansas proceed with current reform efforts to the Arkansas Works program and the waiver request pending at the Federal level?

The Graham-Cassidy block grants do not take effect until 2020. This means Arkansas will proceed with the Arkansas Works waiver amendment as planned, which includes lowering the income threshold for the program from 138 percent of the Federal Poverty Level (FPL) to 100 percent and instituting work requirements.

Lowering the FPL to 100 percent will reduce enrollment in the Arkansas Works program by approximately 60,000 Arkansans. Most of these individuals will then become eligible for federally subsidized coverage through the individual marketplace, allowing the state to concentrate limited resources on those who need it most. The block grant program would allow the state to continue a similar model beginning in 2020, if that is deemed to be the best path forward for Arkansas.

7. If the individual mandate is repealed, will this destabilize the individual marketplace? Won’t premiums become more expensive faster if healthier individuals flee the individual marketplace?

The best way to stabilize the market is to return control back to the states. There is no such thing as a national health insurance market. Markets are state and local—competition for customers who decide for themselves what coverage they want and at what price will lower premiums.

In many cases, the individual mandate has not been successful in convincing healthy individuals to purchase insurance. The flexibility allowed under Graham-Cassidy will result in a wider range of coverage options, which may be a more effective way to motivate individuals to buy insurance.

Under the Graham-Cassidy block grants, states will have ultimate flexibility to design an individual health insurance market that meets the needs of their populations. For instance, they could provide direct financial assistance to individuals to buy health insurance; direct payment to providers for healthcare services; and/or assistance to insurance carriers to help stabilize premiums. These mechanisms will also be helpful in ensuring market participation and access to care.

8. How will funding for the aged and disable population be affected?

Under Graham-Cassidy, per capita caps will be applied to several different Medicaid populations, including aged and disabled individuals. These caps will be set based on several factors, including the cost of covering the various populations in recent years. Additionally, the long-term growth rate for the aged and disabled population will remain higher than the growth rate for other populations, to account for the higher costs often required to provide needed services to these individuals. In addition, Arkansas can utilize a portion of its block grant funds for traditional Medicaid to fill any gaps, when and where necessary.

9. Is block-granting health care funds to the states and letting them decide how to use the money a good thing? 

It is not only a good thing, but the right thing. The ACA proved, among other things, there is no national health insurance market. There are only state and local markets. The ACA transferred authority over state health programs and markets from the states to the federal government, causing significant market disruption.

The federal government was never involved in regulating insurance until the ACA and its role in the process in recent years has resulted in duplicative and burdensome administrative requirements. The decisions about individual mandates, mandated benefits, and all the other decisions the ACA moved to Washington are best made at the state level by governors who understand the unique characteristics and needs of their states. Graham-Cassidy is about putting authority and responsibility back together at the state level and that, in itself, will help stabilize the markets.

10. Will states lose the block grant entirely after 2026? 

No. Graham-Cassidy follows the CHIP model. When CHIP was created, Congress only provided funding and authority for 7 years. In the 20-year history of CHIP, Congress has consistently reauthorized and periodically increased funding for it. In fact, CHIP is up for reauthorization now and there is a bipartisan effort to ensure the program continues.

There is no reason to believe future Congresses and Administrations will act any differently in their approach this new block grant program, which will be the basis of access to care for many Americans.

11. What is the Governor’s perspective in the healthcare debate?

Governor Hutchinson believes the Affordable Care Act is the wrong direction for America. He has always supported its repeal, and his message has been clear and consistent throughout this debate. The Governor believes it should be repealed and replaced with something that works, is affordable, and continues to provide access to healthcare—all the while providing flexibility to the states and a mechanism to better control costs.

Most importantly, the Governor has repeatedly stated that he will not support a replacement bill that dramatically shifts costs to the states. Graham-Cassidy meets these conditions and would enable Arkansas to develop an innovative and sustainable path forward.

A PDF of this FAQ can be found HERE.

CONTACT: Press Shop (press@governor.arkansas.gov or 501.682.3642)