DHS: If Private Option Defunded, New Budget Needed

Jan 21, 2014

Arkansas State Capitol

The director of the Arkansas Department of Human Services says he doesn't have an alternative budget if lawmakers block funding for the state's "private option" version of Medicaid expansion in the February fiscal session.

At a hearing of the Joint Budget Committee Tuesday morning, Senator Linda Chesterfield questioned DHS Director John Selig about the agency’s anticipated savings for some areas, including the Division of Behavioral Health where ‘private option’ funding is expected to reduce the state’s financial burden. Chesterfield asked Selig if the DHS has prepared another budget in the case that funding for the private option is not continued.

“The budget as it’s built now assumes that the private option will continue and therefore we won’t need as much money for indigent care and behavioral health and elsewhere,” Selig said.

“Should that Pollyannaish notion not hold true, what is your alternative?” Chesterfield asked.

Selig replied that the state would have to develop a new budget to offset any losses from the legislature failing to provide the 75 percent supermajority needed to pass the ‘private option’ funding.

Jonathon Gober of the Bureau of Legislative Research noted the DHS is projected to save 7.1 million dollars in the Division of Behavioral Services with the private option. The DHS is projected to have "an estimated overall savings for fiscal '15 of...89 million dollars," Gober said.

Chesterfield went on to say funding for the private option “was on life support,” due to the political climate in the state. Republican Representative Charlotte Douglas asked DHS director John Selig how accurate and concrete the savings projections in the Division of Behavioral Health actually are, noting that projections are based on some unknown variables like future  enrollment and claims numbers.

“When you’re giving these projections, you’re just saying 'we feel like we’re going to save by 50 percent',” Douglas said.

Selig replied that DHS tries to make a conservative estimate for the amount of savings but they projected the 50 percent savings in that division “to be on the safe side.”

The ‘private option’, which was narrowly approved by the Legislature last year, allows low-income Arkansans to purchase private health insurance using federal money devoted to expanding Medicaid under the Affordable Care Act. The fate of the program has been questioned after a recent state senate race propelled an opponent of the law into office, replacing a supporter and lessoning the feasibility of the law's reapproval.