LITTLE ROCK — Gov. Asa Hutchinson said Wednesday he is open to continuing to accept federal funding for Medicaid expansion if the federal government grants the state increased flexibility in shaping its health-care programs.

LITTLE ROCK — Gov. Asa Hutchinson said Wednesday he is open to continuing to accept federal funding for Medicaid expansion if the federal government grants the state increased flexibility in shaping its health-care programs.


"As governor, I will accept the continued expansion dollars from the federal government if we can achieve the (Medicaid) waivers that are needed," Hutchinson told a joint meeting of the Health Reform Legislative Task Force and the Governor’s Advisory Council on Medicaid Reform.


Hutchinson said he favors an approach that controls costs, provides incentives for people to work, strengthens employer-based insurance, promotes healthy behavior and responsibility, allows flexibility for the state and continues to provide some kind of coverage for the more than 200,000 Arkansans enrolled in the Medicaid expansion program known as the private option.


He outlined a "potential plan" with the following seven elements, some of which would require Medicaid waivers:


• Mandate participation in employer-sponsored insurance when it is available and provide premium assistance to workers.


• Require people earning more than 100 percent of the federal poverty level to pay premiums capped at 2 percent of household income. Currently, the private option subsidizes private health insurance for Arkansans earning up to 138 percent of the federal poverty level, at no cost to the participants.


• Require referrals to work training for the unemployed and under-employed.


• Eliminate non-emergency medical transportation coverage.


• Restrict private-market coverage to working people and make the income requirement adjustable rather than offering private-market coverage to all whose income is 0-138 percent of the federal poverty level. People whose income level is below the new cutoff would be enrolled in traditional Medicaid.


• Limit the state’s share of Medicaid expenditures to pre-private option dollars plus inflation, which Hutchinson said would require eventually finding $50 million to $60 million in savings per year in Medicaid and the Medicaid expansion.


• Strengthen program integrity to ensure that all who are receiving benefits are qualified.


If Arkansas continues with Medicaid expansion, its portion of the cost will go from zero to 5 percent in 2017, with its share gradually increasing to 10 percent by 2020. Hutchinson acknowledged that a consulting firm, The Stephen Group, has estimated the program will have a positive impact of $438 million on the state’s budget between 2017 and 2021, but he said that between 2021 and 2023 the program will cost the state between $50 million and $60 million per year.


"There is accounts payable down the road that we’ve got to worry about," he said.


Ending Medicaid expansion is an option, Hutchinson said, but he said it would take $1.4 million to $1.7 million out of the state economy each year and would require the state to fund the Medicaid expansion on its own or cut off health-care coverage for a projected 220,000 Arkansans.


"We’re a compassionate state. We’re not going to leave 220,000 without some recourse, without some access to care," he said.


The governor also said he questions the need to create a state-run insurance exchange. The state currently operates an exchange in partnership with the federal government.


"Right now, we’re building a state-run exchange with a $99 million grant from the federal government, and I’m asking the question, why are we building the state exchange rather than relying on a continued partnership with the federal exchange?"


Hutchinson said the answer he has received is that "we need room for innovation," but he said that to implement his proposals, "it’s not required to have that state exchange."


The Health Reform Legislative Task Force is looking for a new model to replace the private option, which is set to end in its current form at the end of 2016. Sen. Jim Hendren, R-Gravette, co-chairman of the task force, said after Hutchinson’s speech that his proposals are "a benchmark to move us forward."


But Hendren said he is looking at the issue in broader terms than just the impact on the state budget.


"If every state … says, ‘I’m just going to shift all my costs from the state to the federal government,’ mathematically we know what’s going to happen," he said. "The federal government is going to change the match rate, or they’re going to get to the point where they just can’t continue to pay, and then where have our savings gone? Then we have a catastrophe that we could have avoided if we were honest about the cost."


Rep. Charlie Collins, R-Fayetteville, the task force’s other co-chairman, said he liked some of the governor’s proposals but has concerns about others.


"The one in particular that I don’t understand very well yet is the idea of taking able-bodied folks and based on (income level) assigning some to Medicaid fee-for-services and some to the private option. I’m not sure I agree with that direction, but I need to look at it more," he said.


Vice Chairman Rep. Reginald Murdock, D-Marianna, said he appreciated the governor’s suggestions but did not agree that Medicaid expansion would eventually put the state "in the red." He also said he had concerns about the proposals to end non-emergency medical transportation coverage and mandate participation in employer-based insurance.


"I’m concerned that the working poor would be affected negatively," he said.


Mike Castleberry, a member of the board of directors of the Arkansas Health Insurance Marketplace, said when asked about Hutchinson’s comments questioning the need for a state-based insurance exchange, "I always see an advantage to having the state in control versus the federal government."


As an example, Castleberry said Arkansans could have avoided the problems with the rollout of the federal marketplace if Arkansas had established a state-run exchange.