A Model for States, Arkansas' Private Option At Risk

by Andrew DeMillo, The Associated Press  on Thursday, Feb. 6, 2014 1:23 pm  

LITTLE ROCK — Arkansas' plan for expanding Medicaid by buying private insurance policies for the poor instead of adding them to the rolls was heralded as a model for convincing more Republican-leaning states to adopt a key part of President Barack Obama's health care overhaul. But less than a year after its approval, the program that has extended health insurance to 83,000 people is on the brink of being abandoned.     

Supporters are increasingly worried that they won't have enough votes to keep it alive when the Legislature convenes Monday. Rejecting the program could jeopardize the state's budget and reverberate through other states considering similar options for expanding Medicaid as the federal government wants. 

 "The ramifications are way beyond Medicaid and they're way beyond the people who would now go uncovered and they're way beyond the hospitals that would be severely impacted," Gov. Mike Beebe, a Democrat, told reporters. "The ramifications are huge, and the Legislature will have to figure that out."

Narrowly approved by the Republican-led Legislature last year, Arkansas' plan would use federal money to purchase the private insurance for the low-income workers newly eligible under the new health care law. Dubbed the "private option," it appealed to Republicans who believed private insurers would administer the benefits more efficiently than the Medicaid program, which they consider bloated. Republicans also saw it as a step toward finding more options around Medicaid. 

 "Prior to Arkansas you had two options: expand Medicaid or don't," said Matt Salo, executive director of the National Association of Medicaid Directors. "With Arkansas going to the table, other states saw there's now a third option." 

 Other states have pursued similar compromises, with Iowa receiving federal approval for an expansion modeled in part on Arkansas and Pennsylvania exploring a similar plan. Utah Gov. Gary Herbert, a Republican, wants to expand Medicaid and is considering Arkansas' approach. Overall, 26 states have agreed to expand Medicaid while the rest, mostly Republican-dominated, have not.

The plan won the support of more than half the Republicans in the Arkansas House and Senate last year. Beebe compared the expansion to federal highway funding, saying that Arkansas taxpayers help pay for it so they should benefit.

But the takeover of a vacant state Senate seat by a Republican who vowed to kill the private option and a reversal by a former Republican supporter have left the plan in limbo. 

Republican John Cooper, the new member, and others have said they don't believe the state can afford the 10 percent share it will eventually have to pay under the new federal law.

"I think it's going to be more detrimental to our state in the long term," Cooper said.

The Republican fire aimed at the health overhaul has also intensified as the 2014 elections approach.

"I now see it is leading us in the wrong direction," said Republican Sen. Missy Irvin, an earlier supporter who has changed her position.

 

 

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