Arkansas' newly elected Republican Governor Asa Hutchinson had a problem. His state’s custom made Medicaid expansion program was plagued with severe financial issues---poised to run about $778 million over budget. But scrapping the program would mean more than 200,000 low-income enrollees would lose their health coverage.
Unlike other GOP governors in southern states with similar demographics, that haven’t expanded their Medicaid programs or alternatives similar to Arkansas’, Hutchinson made a bold move. He announced last week that his state would continue its so called private option—the alternative to traditional Medicaid expansion-- for two years--putting the program, which has run into serious financial issues, on parole until the state could come up with ways to reform or replace it. The private option gives low-income people financial subsidies to put toward private coverage, instead of adding them to the Medicaid rolls.
The governor’s decision to keep the program came as a surprise to many who had serious doubts about its future because of the enormous financial burden on the state.
Related: Arkansas Expanded Medicaid Program Will Cost $778 M More Than Expected
As Hutchinson said in his speech last Thursday, getting rid of the program might save the state some money, but it would come at an enormous cost to the thousands currently enrolled in the private option, which was implemented as an alternative to Obamacare.
People are eligible for the program if they earn up to 138 percent of the federal poverty level (around $16,000 for an individual, $33,000 for a family of four)---the same as traditional Medicaid expansion. Since it took effect, the state’s uninsured rate has been cut in half.
"This avoids harm to the 200,000-plus in the private option, and it assures our hospitals and providers of financial stability," Hutchinson said. "The human side tugs at our heartstrings and is rightfully part of the debate," he said. Instead, the state will have one year to continue the program while coming up with ways to replace or reform it in the interim.
"This gives us stability for the present and an opportunity in the future to create new reforms that accomplishes the objective of compassion for those currently being served but looking broadly at how we accomplish that in an affordable way," Hutchinson said. He highlighted how the state has benefited from the program, but also expressed concern over its ballooning price tag. Right now, the federal government picks up the check, but the state will start footing 5 percent of the bill in 2017.
Related: The Battle to Expand Medicaid in Arkansas
The private option was championed by Hutchinson’s predecessor Democratic Governor Mike Beebe who worked with Republican state legislators and the Obama administration to come up with a way to expand access to coverage for Arkansas’ poor residents.
The private option gave Arkansas’ lawmakers the ability to safely distance themselves from Obamacare.
Since Arkansas’ private option took effect, a handful of other states that chose to opt out of the Affordable Care Act’s Medicaid expansion have been lining up to create similar programs that allow them to expand access to coverage to their poor residents without having to subscribe to Obamacare. That’s a very appealing deal for Republican-controlled states that aren’t too fond of the law.
Related: Americans Rank Health Care as Top Financial Burden
States like Iowa, Michigan and Pennsylvania, Tennessee, Wyoming and Utah have all submitted similar proposals to the federal government to move forward with their own alternatives and private options. Utah’s plan, for example, includes a three-year block grant to cover about 110,000 low-income residents with private insurance.
North Carolina, Georgia and Texas, meanwhile, have also expressed interest in creating their own proposals.
Those states, which are among the 25 that opted not to expand their Medicaid programs under the ACA, tend to have some of the largest uninsured populations in the country. Texas has the highest uninsured rate—at about 27 percent, according to Gallup. Arkansas’ uninsured rate meanwhile, dropped from 22 percent to 12 percent under its private option. So it’s not hard to see why such a proposal looks appealing to these other states.
Of course, the future of Arkansas’ program is still very much up in the air—since the governor has only supported its extension for one year. Whether the state manages to come up with any real reforms or alternatives is to be determined.
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