The Impact Of Cuts If Arkansas Works Isn't Passed

Apr 14, 2016

Inside the chamber of the Arkansas House of Representatives
Credit ArkansasHouse.org

A contingency budget drafted by Arkansas legislative leaders suggests cuts to various state agencies if funding for the state’s Medicaid expansion plan does not pass during the fiscal session.

The state faces a potential $122 million shortfall if the Medicaid expansion is not reauthorized for fiscal year 2017. Federal dollars available under the expansion go to fund private health insurance policies for the state’s poor. The policy was reapproved in last week’s special legislative session and rebranded “Arkansas Works." It had previously been known as the “Private Option.”

If the legislature does not approve Arkansas Works, a contingency budget put forward this week by House Speaker Jeremy Gillam (R-Judsonia) and Rep. Lane Jean (R-Magnolia) could spread potential cuts to areas like Education, the Department of Health, Department of Correction, Department of Community Correction and aid for counties, .

The budget for the DHS Division of Medical Services, which includes funding for Arkansas Works, has so far not garnered a three-fourths legislative majority needed to pass appropriations. On Thursday, 10 Republican State Senators voted against the measure.

Dina Tyler, deputy director for communications and public affairs at the department, which oversees nearly 54,000 parolees and probationers, says a three percent cut, suggested under Republican House leaders’ contingency budget, could mean staff reductions in her department.

“That’s especially troubling,” she says, “because our parole and probation officers already have average caseloads greater than two times the national average.”

Gov. Asa Hutchinson’s $5.33 billion budget proposal includes funding for Arkansas Works and modest funding increases for other agencies like the Department of Human Services.

The governor’s budget keeps funding flat for the Community Correction Department next fiscal year. Tyler says Hutchinson's plan is workable, compared to the alternative budget.

“What it’s really going to mean for us is an impact on people,” says Tyler. “We’ll have to hold positions open and not fill them. And we could at some point cut positions, including our officer positions.”

The University of Arkansas for Medical Sciences would receive some more state assistance for uncompensated care in the alternative budget. But if the Medicaid expansion plan is not reauthorized, Chancellor Dan Rahn says the institution would not be able to keep up with overall costs of helping the uninsured. He says UAMS predicts a $65 million budget shortfall if the legislature does not pass Arkansas Works.

“That’s a really big number,” he says.

UAMS would face an additional burden in not being able to keep up with uncompensated care costs, Rahn says.

“We can’t deal with that [shortfall] just by limiting our services to patients because the majority of the care we provide is urgent or emergent. And so we would still incur that cost. And that means in order to address the shortfall we would have to cut academic and research programs in a major, major way.”

Rahn says uninsured patients visiting the hospital fell by about 75 percent since the state expanded Medicaid to cover health costs of low income adults. About six percent of UAMS’s 1.5 billion in budgeted revenue comes directly from the state.

State aid to counties is another area that could see a 3 percent cut from the current level of $21.4 million. Chris Villines, executive director of the Association of Arkansas Counties, says public safety in some counties could be affected.

“County jails and sheriff’s offices make up 50 percent or more of many of our county budgets. That’s the most logical place for any cuts,” he says,

Villines also notes that rural counties would likely be affected the most, because a larger share of their revenue comes from the state.

But appropriations bills for various state entities will likely remain on hold until the legislature resolves the Medicaid question.