Arkansas Senate Approves 'Private Option' Proposal

LITTLE ROCK - A proposal to use federal money to purchase private insurance for 250,000 low-income Arkansas residents passed Friday in the state Senate, advancing an idea that Republican legislative leaders and Democratic Gov. Mike Beebe are promoting as an alternative to expanding Medicaid enrollment.

By a 24-9 vote, the Republican-led Senate approved the "private option" proposal that GOP lawmakers and Beebe have negotiated as a compromise over the Medicaid expansion called for under the federal health care law. Its implementation, however, ultimately hinges on lawmakers approving a separate budget bill for the state to carry out the program and the federal government signing off on the plan.

Under the proposal, low-income citizens - those who make up to 138 percent of the poverty line, $15,415 per year - would receive private insurance purchased with federal Medicaid dollars through the exchange created under the federal health care law.

"I believe that we have tailored a program here in this bill that works for Arkansas, one that's conservative in nature and takes into account and embodies a number of conservative principles," said Sen. Jonathan Dismang, R-Beebe, a co-sponsor of the bill.

The bill includes a provision that would end the program if the federal funding falls below certain percentages. It also requires the state to seek federal approval to move some children and adults on Medicaid to the insurance exchange. Lawmakers also would have to revisit the proposal in 2017, when the federal funding for the program begins to drop.

"This is federalism at work," said Sen. David Sanders, R-Little Rock, one of the sponsors of the measure. "We are holding the federal government to hold up their end of their bargain. If they don't, it's over."

The idea has been gaining support among Republicans who won control of the Legislature in November partly on a vow to fight the health care law at the federal level. House and Senate GOP leaders endorsed the proposal this week. The bill is also backed by the Arkansas State Chamber of Commerce, the state's largest business lobbying group.

The state Department of Human Services has said Arkansas would save about $670 million over the next decade by cutting down on hospitals' uncompensated care costs. Beebe has tied the debate over the private option to a Republican push for tax cuts, saying the savings from the program could fund a substantial amount of lawmakers' sought-after reductions.

Several hurdles remain. The budget bill needed for the program must get three-fourths approval in the House and Senate. Friday's vote fell short of the 27 votes needed in the Senate.

The idea has faced opposition from some conservative figures and groups, including Congressman Rick Crawford and the Arkansas chapter of Americans for Prosperity, who say the proposal is no different than the Medicaid expansion called for under the federal health care law. The GOP lawmakers who voted against the plan Friday echoed those complaints.

"It's still an incredible increase in spending, whether you look at it from the federal level or the state level," said Sen. Jim Hendren, R-Gravette. "I didn't come down here to grow government and put a whole lot more people on an entitlement program."

It also faces uncertain prospects in the House, where a committee is expected to take up the measure next week. The top Republican in the House is a co-sponsor of the private option legislation, but has called on lawmakers to delay a vote on the budget bill attached to it until next year.

___

Follow Andrew DeMillo on Twitter @ademillo

(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, rewritten, broadcast or distributed.)