Republican lawmakers are returning to Washington, and they have a nasty Medicaid problem to fix – CNBC

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As lawmakers return to Washington next week, health care remains at the top of their agenda.

One of the key sticking points among Republicans is what to do about Medicaid, especially in red states like Arkansas, many of which are choosing to expand the program. But they will have a hard time paying for expansions without continued federal support. Medicaid is designed to help low-income people get health care.

Whatever gets decided is sure to affect patients, health-care workers and the overall economy.

For people like George Coleman, who drives a cab for a living in Little Rock, Arkansas, it could be a life-or-death decision. He struggled to pay for health care as his asthma worsened and the cost of his medication reached nearly $700 a month.

The state’s expanded Medicaid program allows Coleman to purchase health insurance, making his out-of-pocket costs affordable.

“It would have been impossible for me to survive without government assistance with health care,” Coleman said.

Despite suffering from a past heart attack and diabetes, Kentucky resident Mary Blair was able to receive medical coverage through Medicaid expansion under the Affordable Care Act.

Coleman is one of 330,000 people in Arkansas to sign up for the expanded Medicaid coverage since 2013, far exceeding initial estimates of 250,000. Now, the state’s lawmakers worry that popularity has made the program too costly to maintain, especially as the federal government’s share of the burden begins to dwindle.

Medicaid is jointly funded by states and the federal government, with Washington matching costs at least dollar for dollar. For the 32 states like Arkansas that expanded coverage under Obamacare, the feds paid 100 percent of the costs of newly eligible individuals between 2014 and 2016.

As the law stands right now, Washington’s share is set to gradually decline to 90 percent by 2020. But the GOP’s House-passed American Health Care Act would cut enhanced federal funding entirely by 2020.

“You can’t have a massive shift to the states that they cannot absorb, because if that happens, then we are going to curtail … our coverage, and it’s going to result in more people being uninsured.”
-Asa Hutchinson, Governor of Arkansas

Arkansas Governor Asa Hutchinson inherited the decision to expand Medicaid in his state. Along with state lawmakers, the Republican made changes to the program’s income and work qualifications so as to reduce enrollment by 60,000 people.

“We’ve got to cut the cost curve both for the federal government and for the state,” Hutchinson said, adding that whatever Congress does, it shouldn’t burden the states, which have to balance their own budgets.

“You can’t have a massive shift to the states that they cannot absorb,” he said, “because if that happens, then we are going to curtail even further our coverage, and it’s going to result in more people being uninsured.”

Hospitals such as the University of Arkansas for Medical Sciences may bear the brunt of any cost shifts. Since Medicaid was expanded in the state, the hospital has seen the rate of uninsured patients it cares for fall from 15 percent to only 3 percent. The lower level of uncompensated care helped the medical center record a profit — and hire more than 1,000 workers.

Looming cuts jeopardize the finances of health care providers across the state, especially considering decreases in the Medicare payments set to go into effect, said Dr. Dan Rahn, chancellor of the University of Arkansas for Medical Sciences.

“There’s a complex interplay — hospitals are the largest employers in many communities, and they are essential to economic development in their community,” Rahn said. “No community can experience economic development in the future if it does not have sufficient health-care resources in that community.”

Watch: Government planning to fix this Medicare mistake

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