“The long-term liabilities of the ARKids First program should be identified.”  Policy Foundation research memos, 2006


(March 2013) The unfunded liabilities1 of the state’s ‘ARKids First2 program,’ a major part of Arkansas Medicaid are estimated to expand by more than $1 billion under a so-called “private” option under review by state legislators.


Under the so-called “private” option advanced by some Republican legislators about 250,000 Arkansans would receive federal and state tax dollars to enroll in Medicaid by purchasing private insurance.


Legislators Ignore Unfunded Liabilities


Unfunded liabilities represent the fiscal cost of future commitments.  They are routinely reported by the trustees of federal programs including Social Security and Medicare.  Arkansas public retirement systems also calculate and report unfunded liabilities.  But the state Department of Human Services (DHS) does not calculate the unfunded liabilities of Medicaid programs, considering them annual “pay-as-you-go” programs.  In the case of ‘ARKids,’ the fiscal commitments to enrollees until they reach age 19, when eligibility ends, are necessary to calculate the unfunded liabilities.


The legislators advancing the so-called “private” option do not address unfunded liabilities in their filings.


Unfunded Liabilities Would Expand


The Policy Foundation estimated ‘ARKids’’ unfunded liabilities at $3.5 billion in 2012, according to enrollment, federal reimbursement and average annual cost data.  Unfunded liabilities would increase by $1.2 billion if a similar enrollment distribution occurred under the so-called “private” option.

1 The unfunded liabilities of ‘ARKIds First’ would also expand under a proposed non-private plan supported by the Beebe administration.

2  ‘ARKids First” was established in 1997 under Gov. Mike Huckabee with a waiver from the Clinton administration.