- Associated Press - Wednesday, February 17, 2016

LITTLE ROCK, Ark. (AP) - Federal officials said they want to work with Gov. Asa Hutchinson on his plan to overhaul Arkansas’ hybrid Medicaid expansion, but expressed concerns that some of the new restrictions he’s seeking could have “adverse” impacts, according to a letter released to lawmakers Wednesday.

Speaking to a legislative panel, Hutchinson said Wednesday the letter was an encouraging sign in his push to overhaul the “private option” expansion that uses federal funds to purchase private insurance for low-income residents. Hutchinson wants to rename the program “Arkansas Works” and add new limits to its benefits.

U.S. Health and Human Services Secretary Sylvia Burwell stopped short of endorsing any of Hutchinson’s specific proposals in a letter dated Tuesday, but said she was hopeful she could work with the Republican.

“You outlined a number of specific changes in support of these goals, and many are quite innovative,” she wrote. “In some cases, they also push the bounds of what is allowable under federal Medicaid law and raise concerns about potential adverse impacts on beneficiaries.”

Hutchinson outlined to lawmakers the proposed changes he’ll ask them to take up during a special session he said he’ll likely call in early April.

Crafted as an alternative to expanding Medicaid under the federal health law, the program is providing coverage to more than 200,000 people. If he wins legislative support for the changes, Hutchinson’s proposals would still need to be approved by the federal government.

Hutchinson said he and Burwell “butted heads” on the goals of the expanded coverage when they met earlier this month, but believed her letter was a step in the right direction and that it “recognizes that both sides are trying under the current federal policy to reach a conclusion that will help us to move forward with Arkansas Works.”

The proposals include requiring participants to enroll in their employers’ plans if available, with the expansion funds being used to pay their premiums, and that abled-bodied participants with no income be referred to job training and job search programs. Hutchinson also wants to charge premiums and co-pays for those with income above 100 percent of the federal poverty level, but said penalties for not paying the premiums and co-pays won’t mean people will be kicked off the program.

Hutchinson said he’s no longer pursuing one of his initial proposals to impose a restriction on coverage for those with “substantial” assets, such as a house. He also wants to end the program’s 90-day retroactive eligibility, meaning coverage will start when someone is enrolled, and to give the state the ability to end the program with 30 days’ notice.

Hutchinson spoke to a legislative panel a day after he defended his push to keep the hybrid expansion, dismissing the criticism some fellow Republicans are facing from primary challengers and conservative groups that it amounts to an embrace of the federal health law.

Opponents of the program said they’re still not swayed by Hutchinson’s argument. “This is growing government. It’s really another entitlement program that neither the state nor the federal government can afford,” said Sen. Gary Stubblefield, a Republican from Branch.

Hutchinson again warned that ending the program would create a budget deficit of at least $100 million, a gap he says would threaten other state services and his plan to boost funding for the state’s highway system.

“Let’s make the best decision now for Arkansas. As federal policy changes, we will adjust accordingly,” Hutchinson said. “As powerful and as determined as we are, we cannot change federal health care policy by simply being stubborn.”

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Follow Andrew DeMillo on Twitter at www.twitter.com/ademillo

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