Last fall, Arkansas became the first state to adopt the so-called “private option”— an alternative to Obamacare’s Medicaid expansion that allows low-income people to buy health insurance on the private exchange instead of going onto the federal program. Now with the midterm elections looming and pressure on the president’s health care law ramping up, the country’s first model for the private option could be in jeopardy.
The program’s fate is now in the hands of the Arkansas House of Representatives, which will vote for the fifth time to approve the $915 million in federal funding needed to continue financing the alternative to Medicaid expansion.
The plan differs from traditional Medicaid, which requires enrollees to join state-run programs or private managed care plans specifically designed for the poor. Instead, it
allows low-income people (earning up to 138 percent of the federal poverty level—or $15,600 for an individual) to purchase policies available to any other consumer on the marketplace.
Arkansas has served as somewhat of a guinea pig for other states that have opted out of Medicaid expansion, but are still looking for ways to provide coverage for their uninsured population. Many conservative lawmakers see the private option as a favorable alternative to what they see as an ever expanding federal entitlement program.
Just last week the federal government approved funding for Pennsylvania to set up an Arkansas-style private option. Utah, Florida and Tennessee are also moving toward similar plans.
If the Arkansas State Legislature votes against the program, however, it could cause a ripple effect for other states. Arkansas’ private option faces stiff opposition from Republican state lawmakers who either are against the proposal for political reasons and likely running against Obamacare in the coming election, or are philosophically against more taxpayer subsidies.
Still, Arkansas Gov. Mike Beebe, a Democrat, told reporters at a press conference in Washington on Monday that he is confident it will eventually pass.
Putting politics aside, Beebe said the decision to keep the private option comes down to the numbers. “It’s arithmetic, it’s not even math,” the governor said. He added that if state lawmakers vote against going forward with the plan, it would cost the state about $89 million in savings and cost hospitals and businesses millions of dollars.
It will also mean that about 200,000 Arkansans who have qualified for Medicaid will go without health insurance.
Beebe added that it would also dramatically reduce the number of people in the state’s health insurance exchange, which could potentially lead to increased premiums next year. “It will have a devastating effect on the exchange prices,” he said.
The governor said several skeptical Republican governors in other states are also coming around to the idea of adopting similar private option plans, though he did not provide names.
Beebe said it doesn’t make sense not to go with some kind of private option, since the federal government pays for it until 2016.
“Most of these guys have recognized that …some will never do it,” he said of the governors. “But more and more are trying to find a way to do it, since it’s going to cost states money, whether you take it or not.
It’s not going to impact the federal deficit or debt whether they take it or not,” Beebe said.
Even if Arkansas approves the appropriation this year, some state lawmakers say it will be even more difficult to renew next year depending on the political landscape after the 2014 elections.
Critics of the plan warn that it could be a potential financial burden for states down the road. After 2016, states that expanded Medicaid or used the private option will have to cover up to 10 percent of the cost.
Some 25 states have not expanded Medicaid since the U.S. Supreme Court ruled in 2012 that states had the option to decide.
Below are the states that have opted in or out of Medicaid expansion, courtesy of The Advisory Board
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