By expanding health-care funding in Arkansas, state legislators would be able to soften the effects of any tax cuts they might approve this year, Gov. Mike Beebe said while speaking Tuesday morning tomembers of the Little Rock Regional Chamber of Commerce.

“[Legislators] need to look at things as a whole,” he said. “The expansion of Medicaid creates and frees up some resources to accommodate tax cuts.”

Beebe spoke for almost an hour at the Chamber of Commerce’s breakfast at the Harry R. Kendall Science and Health Mission Center at Philander Smith College. He addressed several topics, including the proposed Big River Steel LLC project in Mississippi County, but he focused mainly on Medicaid expansion.

State lawmakers are debating whether to offer health insurance to 250,000 low-income Arkansans through the state’s Medicaid program.

The 2010 Patient Protection and Affordable Care Act al-lows states to choose to extend Medicaid coverage to people making up to 138 percent of the federal poverty rate, or $15,145 annually for an individual.

But last month, Beebe received permission from U.S. Health and Human Services Secretary Kathleen Sebelius to use federal Medicaid money to purchase private insurance policies for the 250,000 state residents who meet the criteria.

Under the so-called private option plan, the federal government would pay 100 percent of the premiums for policies purchased through Arkansas’ health-insurance exchange. After three years, the state would be responsible for 10 percent of the cost.

Beebe has given members of the Republican-controlled Legislature a draft of the plan to extend health coverage through the health-care exchange, which is part of the Affordable Care Act. The draft, which some lawmakers have called just a framework, is not an actual piece of legislation.

During his speech, Beebe said the University of Arkansas for Medical Sciences, which he called the “biggest economic driver” in central Arkansas,would suffer if state legislators didn’t expand the Medicaid program.

He said tax cuts without Medicaid expansion would affect the type of care UAMS can offer.

UAMS has seen an increasing number of uninsured patients during a period in which there has been “downward pressure” on its revenue sources, said Chancellor Dr. Dan Rahn, adding that the majority - roughly 67 percent - of the UAMS Medical Center’s revenue is derived from patient care.

“We just don’t have a sustainable business model going forward if we continue through this pathway of more and more uninsured in Arkansas. … We won’t be able to accomplish our mission the way we have been in the past,” he said. “The way to address this is to extend coverage, either through Medicaid expansion or the private option,” Rahn said.

Uncompensated care, when a patient is uninsured and has no way to pay, cost UAMS $203 million in its 2012 fiscal year, which ended June 30. That’s a 16 percent increase from the 2011 fiscal year when the unpaid bills totaled $175 million.

“If we don’t see Medicaid expanded - either through the private option or the originalplan - if we don’t see that happen, we are going to start limiting the amount of care offered to the uninsured,” Rahn said. “It’s just the reality.”

UAMS is able to submit the costs for uncompensated care to the federal government to receive a partial reimbursement, called a disproportionate-share hospital payment, but the Affordable Care Act will soon discontinue the payments, making the expansion of Medicaid essential, Rahn said.

“We will see new revenue for those who become newly insured but we will lose payments for the uninsured that we currently get,” he said.

Business, Pages 25 on 03/27/2013