Dive Brief:
- Instead of expanding its Medicaid rolls, Arkansas became the first state to replace Medicaid by simply using the funds to buy private insurance policies for low-income residents who otherwise would have been enrolled in Medicaid, the so-called "private option."
- Outgoing Democratic governor Mike Beebe and the Republican-controlled Legislature worked out the deal, but the program may be short-lived if Arkansas' incoming Republican Gov. Asa Hutchinson and the new legislature can't work out a longer-term plan to cope with the rising state contribution to the funds. Arkansas' eventual share of the costs, which begins at 5% in 2017 and rises to 10% by 2020, may wind up eventually killing the program.
- The private option makes use of the Medicaid expansion funds being offered by the feds, but those funds are used to purchase private insurance, which they believe will be more efficient than Medicaid. It differs from a similarly creative solution created by Tennessee Gov. Bill Haslam, that uses the funds to create a voucher-based Medicaid alternative.
Dive Insight:
The danger of playing politics with healthcare is that after all the rhetoric is done and the campaigns are over, the newly-elected officials are still stuck with the dilemma of the high cost of healthcare for their constituents. If they want to win the next election, they have to find a way to solve the problems they campaigned on, but the business of solving problems is far more complex than the business of winning elections.
Whether the program has been a success so far depends on who you ask, with the numbers being cited by supporters and opponents of this Medicaid expansion differing wildly. The program has offered coverage to 213,000 people to date.
For example, opponents of the private option argue that it is a significantly more expensive approach to Medicaid expansion than traditional Medicaid. They argue that because the ACA requires the state to buy wraparound coverage protecting beneficiaries from large out-of-pocket expenses, the real cost of the private option is much higher than it appears. Based on these financial issues, not to mention philosophical differences, the state's Republicans are largely dead-set against the program.
Supporters, meanwhile, have their own set of numbers. For example, Arkansas medical director Andy Allison has completed an analysis concluding that the private option saves the state money overall, particularly by cutting back on the tens of millions of dollars the state spends per year paying for care for the uninsured. He also notes that nearly $1 billion in new federal money will be paid to local healthcare providers. These are the numbers Democrats have tucked under their arm.