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It’s the Moment of Truth for One State’s Grand Obamacare Bargain It’s the Moment of Truth for One State’s Grand Obamacare Bargain

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It’s the Moment of Truth for One State’s Grand Obamacare Bargain

Arkansas struck a major Medicaid expansion compromise in 2013, but the political coalition behind it is fraying.


Arkansas could become the first state to expand coverage under the Affordable Care Act and then take it away.(Joe Raedle/Getty Images)

Arkansas's grand health care experiment is on the rocks.

It was less than a year ago that a Democratic governor and a Republican Legislature passed a compromise to expand their state's Medicaid program.


But now, just as the Arkansas law is starting to take effect, some Republican legislators are thinking they might take it back. And if they do fold it entirely, the nearly 100,000 low-income residents who've already signed on to the program may find themselves once again uninsured.

At issue is Arkansas's "private option," a plan that would use federal funding to provide health coverage to the state's low-income residents.

The program is a version of the Medicaid expansion contained in the Affordable Care Act, which offers funding to states to expand the program to cover all residents whose incomes put them below 138 percent of the federal poverty line.


Arkansas's expansion, however, contains a wrinkle: Instead of using the funds to enroll residents in Medicaid, the state is taking the federal money and using it to help residents buy insurance on the state's new insurance exchange.

The plan was intended as both a policy innovation—the state is hoping it will be both more cost-effective than Medicaid and will deliver better results—and a political compromise. Democrats wanted the expansion to burgeon the social safety net in a state whose Medicaid program was previously among the country's most restrictive, but many Republicans were wary of expanding an entitlement program that they see as costly and ineffective.

Obamacare mandates that the federal government pick up nearly all the costs of the expansion, and the lure of federal funding was strong.

Arkansas is not a wealthy state: The 2012 census found nearly 19 percent of state residents meet the federal standard for impoverished. Nor is it a particularly healthy one: The state ranked 44th out of 50 states in life expectancy, according to the Kaiser Family Foundation's 2010 assessment.


And so, in September, Democratic Gov. Mike Beebee struck a deal with Republicans codifying the state's "private option" Medicaid expansion. Through a waiver, the Obama administration granted the state permission to experiment with their share of federal funding, under the condition that the program would cost both the federal government and the new beneficiaries the same as the traditional Medicaid program, and that coverage would be equivalent.

Arkansas has influenced other states to attempt a similar private model. Iowa's waiver has been approved, Pennsylvania is expected to submit its own to the administration shortly, and New Hampshire and Utah are both considering their own versions of the approach.

Enrollment began in October, and thus far more than 96,000 Arkansans have signed up. The state estimates that between 200,000 and 250,000 people are eligible.

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But though the law is up and running, the political pact that created it was hardly carved in stone.

The state law only funded the program through June 30 of this year. To keep it going, the Legislature has to vote annually to renew the funding. If they don't, program participants will lose their insurance coverage starting July 1.

The House is voting this week on a funding bill for the state's health department that would include extending financing for the private option, but its passage is far from guaranteed.

Some Republicans are withholding their support, arguing against further spending, and they remain resolutely opposed to any program that is implicitly linked to Obamacare. Others oppose the private option but do not want to hold up the full appropriations bill. Instead, they support amendments that would damage the program without revoking core funding.

"The votes are almost certainly there to not pass the private option. The votes are almost certainly not there to pass a budget bill without the private option. That's an impasse, folks," said Republican state Rep. Nate Bell last week, according to the Arkansas Times. "Do we want to become D.C.?"

Bell voted against the private option last year and intends to fight it in 2015. For now though, he supports passage of the funding bill, as long as it includes language he added that is intended to harm the program.

"I didn't vote for this program originally, I don't like it; I want it to go away," he said. "I would love to see the program fail. I do want a controlled failure."

Funding for the program is further complicated by the high bar the state sets for spending bills. To be adopted, the measure needs to pass with more than three-fourths of the vote in both chambers.

In 2013, that wasn't easy. Democrats backed the measure, but Republicans were split on it, and in the end it passed only narrowly. The measure needed 75 votes in the House and got 77. In the Senate, it needed 27 and got 28.

Again facing a challenge, the amended bill passed the budget committee last week and is scheduled for a vote in the House on Tuesday.

It remains to be seen whether Beebee and his fellow Democrats can get enough Republicans to back the program this time around. The resignation and replacement of one Democratic supporter of the private option by a Republican opponent in a Senate special election last month, plus the possible flip in the vote of at least one other Republican senator, has threatened to derail the program. There were nine senators opposed to the bill at last count, just enough to keep it from passing.

A bright spot for the bill is that House Speaker Davy Carter, a Republican, says the spending measure needs to move to keep the government from falling into a shutdown, and says he'll make the chamber vote as many times as needed to get it through. If and when the bill passes in the House, it will be sent to the Senate, possibly as soon as this week.

But pass or fail, the House bill in current form already wounds the program. Bell's amendment would prohibit state spending on outreach or promotion of any part of the health care law—not just the private option. A second amendment would impose more restrictive requirements for federal waivers for the program.

Democratic supporters are not pleased with the proposed changes going into this week, but—facing the prospect of watching 100,000 individuals lose their health care coverage—they're thus far willing to stomach legislation making it more difficult to reach potential future enrollees.

Don't Miss Today's Top Stories

Health Care Edge is one of my top resources."

Meghan, Associate Specialist

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