SEVENTEEN ARKANSAS LEGISLATORS SEEK

MEDICAID UNFUNDED LIABILITIES ESTIMATE

"The new Patient Protection and Affordable Care Act (PPACA) is a burden on Arkansas taxpayers, though executive branch officials are in denial about its budget exposure. Legislators need to understand that nationalized medical insurance, in the economic long term, will restrict their ability to fund services like public education that are required under the Arkansas Constitution." Policy Foundation, 2010 report

(September 2014) Seventeen Arkansas state legislators have formally requested¹ a Medicaid unfunded liabilities estimate from the state Department of Human Services. The lawmakers' courageous move to protect Arkansas taxpayers' interests was quickly rejected by DHS Director John Selig, whose department supports Medicare expansion under PPACA.

Unfunded liabilities "represent the fiscal cost of future commitments. They are routinely disclosed by Arkansas public retirement systems in their actuarial reports," the legislators explained in their August 15 letter to Selig.

"We do not consider Medicaid a 'pay-as-you-go' program," they wrote. "Our constituents deserve to understand the true cost of Medicaid expansion ... We believe transparency of the long-term unfunded liabilities created by Medicaid expansion would serve our constituents and the public interest."²

Selig rejected the legislators' request in a reply, arguing, "there are no unfunded liabilities."³

Seventeen Legislators Support Taxpayers

The unfunded liabilities created by Medicaid expansion undermine future legislatures' ability to fund constitutionally-required programs and advance pro-growth economic policies in a climate of subpar Arkansas jobs creation.

State Sen. Cecile Bledsoe of Rogers first raised the issue in an April tweet.

Bledsoe is chair of the Senate Committee on Public Health, Welfare and Labor. The panel oversees matters pertaining to public health and welfare.

Unfunded liabilities are a crucial, yet underreported issue for Arkansas taxpayers. Taxes increase on a temporary⁴ or long-term⁵ basis when state officials rely on 'pay-as-you-go' economic reasoning, not secondary analysis.

The seventeen legislators supporting taxpayers on this issue are as follows:

· Senator Cecile Bledsoe of Rogers

· Senator Alan Clark of Lonsdale

· Senator John Cooper of Jonesboro

· Senator Jim Hendren of Gravette

· Senator Bart Hester of Cave Springs

· Senator Bryan King of Green Forest

· Representative Randy Alexander of Fayetteville

· Representative Bob Ballinger of Hindsville

· Representative Jonathan Barnett of Siloam Springs

· Representative Les Carnine of Rogers

· Representative Charlotte Douglas of Alma

· Representative Joe Farrer of Austin

· Representative Charlene Fite of Van Buren

· Representative Karen Hopper of Mountain Home

· Representative Lane Jean of Magnolia

· Representative John Payton of Wilburn

· Representative Terry Rice of Waldron

Estimate Is Possible

Unfunded liabilities created by Arkansas Medicaid expansion can be estimated using enrollment, cost, and federal reimbursement data. The Policy Foundation used similar data to estimate $3.5 billion in unfunded liabilities under ARKids First, a major Arkansas Medicaid component.

--Greg Kaza

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¹ Correspondence, Bledsoe to Selig, August 15, 2014

² Ibid.

³ Correspondence, Selig to Bledsoe, August 26, 2014. Selig wrote, "The Arkansas Medicaid program is substantively different in that states are not required to have a Medicaid program, and individual Medicaid eligibility is subject to renewal and to changes in federal law, state law, or the Arkansas Medicaid State Plan. Each year the program is fully funded by Revenue Stabilization. If funding falls short, the program can be cut back. If, in a future year, Medicaid was not funded through Revenue Stabilization, the program would shut down. Therefore, there are no unfunded liabilities."

⁴ A temporary income tax rate increased was enacted when state officials failed to estimate the long-term economic impact of the 2001 recession.

⁵ A long-term regime of higher income tax rates vis-a-vis adjacent (border) and Southeast region states exists in Arkansas.