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About 200,000 low-income Arkansans could see major changes to their health coverage next year after the Trump administration recently informed state officials it will not renew a key Medicaid agreement with the federal government.
The decision by federal officials, citing authority granted under President Donald Trump’s signature tax-and-spending law, suggests the GOP-led state’s predicament could foretell other repercussions in how states are allowed to run the program under federal waivers.
Nearly every state has at least one waiver to run its Medicaid program differently than required by federal law, such as allowing the use of private managed-care plans or expanding eligibility for mental health or long-term care services. Some Medicaid waivers have stretched decades, renewed by presidential administrations of both parties, effectively making the demonstration programs they created permanent.
Arkansas is one of a dozen states with a waiver expiring Dec. 31 that face the additional restrictions the Trump administration has placed on new or renewed waivers.
Though it has yet to finalize its decision, the federal Centers for Medicare & Medicaid Services said Arkansas’ 13-year-old waiver does not comply with new “budget neutrality” rules that take effect in January, said Gavin Lesnick, a spokesperson for the Arkansas Department of Human Services. The rules tighten a policy forbidding Medicaid waivers from increasing federal spending on the program beyond what it would have increased without the waiver.
The state is now seeking a two-year extension after hearing from CMS that its request for a five-year renewal would not be granted. If its Medicaid expansion waiver is not renewed, Arkansas officials have said they will continue offering expanded eligibility through existing Medicaid law, a change that could leave enrollees with access to fewer doctors and other health providers.
Rather than place more people in its traditional Medicaid program serving largely children, pregnant women, and disabled people, Arkansas obtained a waiver to buy Affordable Care Act marketplace policies from private insurers for adults covered by the Medicaid expansion. This “private option” gave enrollees greater choice of doctors and other health providers, because some doctors are more willing to see patients with private coverage, which generally pays more than regular Medicaid.
The move helped cut the state’s uninsured rate by nearly half, but it also ended up costing more than if beneficiaries were covered under Medicaid’s traditional, fee-for-service program.
Critics characterize the new waiver rules as part of a Trump administration effort to dramatically shrink Medicaid, the government program for those who are low-income or disabled, which grew rapidly under Presidents Barack Obama and Joe Biden.
“What we have here is a sneaky way to cut Medicaid expansion and the Medicaid program,” said Nicole Huberfeld, a professor of health law at Boston University.
Medicaid enrollees won’t know whom to blame if they lose coverage because the administration is using arcane regulatory processes to make the changes, Huberfeld said.
At issue are waivers granted by the government that allow states flexibility from existing Medicaid law in how they cover low-income residents, as long as the changes will not increase what Medicaid costs the federal government.
Pivoting from the long-standing practice of checking only retroactively whether states were keeping their budget promises, the Trump administration said in June that it would not renew or approve any waivers unless CMS first certified that they would not increase costs to the federal government.
In its new guidance, the agency said the new waiver rules are expected to reduce federal spending.
