DHS working to cut costs

LITTLE ROCK – More than 870,000 Arkansas residents receive some type of health care through Medicaid, which is operated by the state Department of Human Services.

The department has made public a variety of cost-cutting ideas and has been gathering input from people who would be affected by them. Stakeholders include physicians and clinics, hospitals, pharmacies, therapists, rehabilitation and long-term care facilities.

Last year the department trimmed the number of Medicaid recipients in Arkansas, after the expiration of the national public health emergency caused by the Covid epidemic. During the pandemic Arkansas Medicaid rolls reached a high of more than 1,151,000 people.

After a six-month period of redetermining eligibility of recipients, the program now serves about 245,000 adults, 394,000 children and 250,000 adults in ARHOME. That is a health care program for adults who earn up to 138 percent of the federal poverty level. The department uses Medicaid dollars to subsidize their private health insurance.

Many people drop off the rolls and get back on again, depending on their financial circumstances. On a particular day the number of Medicaid enrollees is about 870,000 people, but over the course of last year more than a million Arkansas residents received some type of health care through the program.

The steady growth in the cost of the program is a concern for legislators. Last year the state and federal governments combined to spend $9 billion on the Arkansas Medicaid program. Federal funding accounts for 72 percent of the total, but in October that will go down to 71.14 percent. If Medicaid spending stays the same, this change will shift $55 million in costs from the federal government to the state.

State spending on Medicaid has been dramatically increasing, both in total dollars and as a percentage of the overall state budget. From Fiscal Year 2018 to 2023 state funding of Medicaid rose by 41 percent. As a percentage of state general revenue spending it increased from 20 percent to about 23 percent.

According to an analysis recently published by the department, there are several factors driving up the cost of Medicaid that state officials cannot control. For example, during the pandemic more people became eligible because they lost their jobs. Also, the federal government required states to keep people enrolled during the pandemic, which was a major reason that Arkansas Medicaid reached an overall high of 1.15 million people.

States have flexibility to determine eligibility for some medical procedures, but are required to pay for numerous mandatory benefits, such as inpatient and outpatient hospital services, home health and the cost of transportation to clinics and physicians’ offices.

In 2019 Medicaid spent an average of $6,046 per beneficiary. In 2023 that amount had gone up to $7,280.

The department’s 128-page analysis provides a list of options to lower costs, but does not make any recommendations. The legislature, the governor and the department will gather input from health care providers and beneficiaries before making any final decisions on which options, if any, the state will choose.

Those decisions will require lengthy study because they will affect so many people’s access to medical care, and will influence how hundreds of millions of dollars are spent.