The ‘Private’ Option Scare Tactics Of The Beebe Administration

2009_earth_hour_at_state_capitolThere’s no doubt the ‘private’ option version of Medicaid expansion is in serious, serious trouble in Arkansas. Perhaps there is no better indicator of this fact than the all-out scare tactic campaign that is currently underway by the Beebe administration.

On Tuesday, Department of Human Services Director John Selig said “We do not have a contingency budget” if the private option is not extended. Selig also said, as reported by the Dem-Gaz, that

If we do away with the private option, [the Legislature] would have to decide whether to restore those Medicaid programs and bring all those people back onto Medicaid or have them go without care.

Which seems like a strange thing to say, since these new 85,000+ people are on Medicaid.

On Thursday, Governor Mike Beebe himself told reporters that, if the Legislature declines to re-authorize federal funding for the private option,

We have at least [an] $86 million hole [in the proposed budget]; maybe a bit more than that depending upon what the revenue does.

No comment from the guv as to why the state has already revised down the budget forecast and why the economic boom we were promised under the PO isn’t coming.

Also on Thursday, UAMS Chancellor Dan Rahn told the UA Board of Trustees that if the PO is ended, UAMS

is going to be a very different institution. We are at a crossroads…[with] only incrementally better changes we will fail…the model we’ve relied on will not support the mission going forward.

Rahn is more correct than he knows: UAMS will be a very different institution if the PO fails. In fact, if the PO is defunded, hospitals like his will be spared from millions of dollars in additional uncompensated care costs. In 2000, uncompensated care provided by Maine hospitals amounted to roughly $40 million per year. By 2011, after Maine’s Medicaid expansion in 2002, uncompensated charity care costs had risen to $196 million. For those of you keeping score at home, that’s an increase of nearly 500%. You’d think Rahn and other hospital administrators would be urging lawmakers to discontinue Medicaid expansion.

Most amazingly, however, Director of the Department of Community Correction Sheila Sharp told the Arkansas Board of Corrections on Thursday that the ending of the private option would “likely result in closing prison beds, laying off officers.”

I contacted Sharp’s office for clarification on these comments. She was unavailable, but Dina Tyler, a spokesperson with DCC, called me back. I asked her how the department arrived at the conclusion that these cuts would need to be made — what formula did they use? According to Tyler, Sharp’s comments were simply “hypothetical:”

It was during a discussion about what could happen if private option fails and the state has to make up the hole which, depending on which accounts you read, it’s somewhere in the 80s — millions — and it could be more. So it was all hypothetical about what could happen. And if that results in major cuts to the agencies, when you start looking at a correctional agency…really the only substantial savings you can have is by shutting down a prison or, in our case, either community corrections center or laying off officers. That’s about it. If you put it in context, that’s how that statement came about.

Obviously if Arkansas opt-outs of the PO, there will be some ramifications on the state budget.  But I asked Tyler what the connection is between Obamacare funding and prison funding:

It’s because, in preparation for private option, there were tax cuts so that’s money that’s not going to come in and it was done in anticipation of federal money. If that federal money isn’t there because we don’t participate and Arkansas has to figure out a way to do..to do another route, then general revenue is not going to be there.

Tyler continued:

You’ve got to fund healthcare, you’ve got to totally fund education — public education, not higher — and then you would start looking at the other agencies. Well, that could result in cuts. If the cuts were substantial enough, that’s really the only way we could save money. That’s it. And so really, it was just a hypothetical discussion.

(Was DCC laying off officers before the private option was passed? I sure didn’t read anything about that in the news. Y’all Google it and email me if you find anything.)

Before the end of our talk, Tyler reassured me again that the comments from Sharp were “hypothetical…It was thinking out loud. Any time there’s had to be big budget cuts, that’s what we’ve talked about. If a budget cut is big enough, we could be closing things.” I understood this to mean, “We made all this crap up.”

Additionally, I asked Tyler if these budgetary assumptions came from DF&A or the governor’s office. She said they came from “reading what’s been reported in the media.”

If I were a state bureaucrat, I’d be much more worried about the impact of the ‘private’ option on the state’s budget beginning in Fiscal Year 2017, when the federal match begins to drop. Additionally, by 2021 (at the latest), the federal reimbursement for the expansion population will drop to 90% (at least). That’s when the real pain — via massive tax increases or significant budget cuts — will begin. But no one wants to talk about that.

Color me skeptical that DCC — or any other state agency — will have to make actual cuts if the PO is defunded. I say “actual cuts” because the state budget grew tremendously this fiscal year, as it typically does. Any downward revision to the upcoming budget would simply be reductions in increases, not actual cuts. With that said, I realize that any minuscule reduction in government budgets is conceived by bureaucrats as a cataclysmic, apocalyptic event — especially when their boss’s signature program is on the line. But the average Arkansan is in favor of rolling back the size and cost of government; they’re not losing any sleep over it — and they’re tired of these tired scare tactics from the Beebe administration.

Come back next week. I’ll have more to say about the disastrous, unsustainable impact that ending Medicaid expansion won’t have on our state budget.

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