According to state law, Arkansas’ failed Obamacare expansion is set to expire at the end of this year. But Governor Asa Hutchinson has proposed overriding that deadline – which he signed into law last year – to continue providing welfare to able-bodied adults forever.
Hutchinson’s chief argument is that ending the program would create “a $100 million annual budget hole” due to lost budget “savings.” It’s a familiar refrain, used by former Democratic Governor Mike Beebe for years. There’s just one problem: it’s not true.
Arkansas’ so-called Private Option Medicaid expansion isn’t saving taxpayers money and allowing it to end won’t necessitate a massive tax increase or trigger the zombie apocalypse. In fact, allowing expansion to sunset would save taxpayers billions of dollars.
Late last year, the state’s health care task force received a report from the state’s Medicaid consultant, The Stephen Group. According to the report, the state stands to “net” nearly half a billion dollars over the next five years as a result of Obamacare expansion.
But contrary to popular belief, the Stephen Group wasn’t required to conduct its own actuarial analysis of the state’s Medicaid expansion. Instead, the consultants appear to have relied on unpublished 2015 estimates from the state’s original actuarial firm, Optumas, and the state’s solidly pro-expansion Department of Human Services.
Optumas’ original 2013 report was used to pass Medicaid expansion, despite significant methodological problems. But putting aside Optumas’ past forecasting problems, there’s plenty of reason to believe these latest projections are faulty as well.