Health Care Independence Program and Budget Neutrality

October 1, 2015


Joseph W. Thompson, MD, MPH
President & CEO


Arkansas’s use of a premium assistance model to finance healthcare coverage for low-income Arkansans has brought praise from advocates for the state’s innovative approach, replication from other states seeking an alternative to traditional Medicaid expansion, and scrutiny from those wanting to ensure cost containment. Arkansas’s model — formally called the Health Care Independence Program (HCIP) — required a federally approved Section 11154 demonstration waiver for implementation. Demonstration waivers under Section 1115 of the Social Security Act provide states with federal matching funds for projects that test new approaches in how Medicaid programs operate. A requirement that must be demonstrated prior to waiver approval is budget neutrality. In other words, the cost of the waiver program cannot exceed federal spending that would have otherwise occurred absent the waiver. This fact sheet provides general information about budget neutrality and its assessment, scrutiny of Arkansas’s budget neutrality assessment and spending relative to budget neutrality caps, and progress on state spending under the waiver to date.