Why Arkansas’ Newly Approved Alternative To Medicaid Expansion Is A Big Deal For Obamacare

Arkansas Gov. Mike Beebe (D), center, speaks at a March rally in front of the Arkansas state Capitol in Little Rock promoting Medicaid expansion CREDIT: AP PHOTO/DANNY JOHNSTON
Arkansas Gov. Mike Beebe (D), center, speaks at a March rally in front of the Arkansas state Capitol in Little Rock promoting Medicaid expansion CREDIT: AP PHOTO/DANNY JOHNSTON

On Friday, the federal Center for Medicare and Medicaid Services (CMS) approved Arkansas Gov. Mike Beebe’s (D) alternative proposal to expand Medicaid under the Affordable Care Act. That move could end up encouraging Republican-controlled states skeptical of growing the public health entitlement under Obamacare to embrace Beebe’s alternative model, ultimately extending basic health benefits to millions of low-income Americans and the working poor.

Obamacare allocates generous federal funding to states that expand Medicaid to all Americans living up to 133 percent of the Federal Poverty Level (FPL). Although Beebe supports the expansion, he realized it would be difficult to convince lawmakers in a deeply red state where both legislative houses are controlled by Republicans to approve of such a plan. But faced with an adult uninsurance rate of 26 percent, Beebe decided to negotiate a compromise with Republican state lawmakers.

The agreement that Beebe struck with the legislature — dubbed by some as the “private option” — will still provide health insurance to all Arkansas residents up to 133 percent FPL. But instead of placing these newly-eligible Americans in the public Medicaid program, Beebe’s alternative will send them to shop for private insurance through the state’s Obamacare marketplace. The federal money that would have been used to pay for the Medicaid expansion would instead be used to give low-income people government subsidies to buy private coverage.

The legislature signed off on the alternative, which will extend health coverage to an estimated 200,000 low-income Arkansans, back in April. All that remained to be seen was whether the federal government would actually allow Arkansas to pursue the alternative model — and that approval finally came on Friday.


“Arkansas and CMS worked together to find flexibilities that gave the state the tools to build a program that worked for them and their residents,” wrote CMS in a statement. “We appreciate the collaboration with Arkansas throughout the process and applaud their commitment to providing Arkansans with access to high, quality health coverage.”

Beebe’s victory in procuring a waiver for the private option could bode well for several Republican-led states pursuing similar proposals, inlcluding Iowa, Tennessee, and Pennsylvania.

It may also encourage red states to embrace Medicaid expansion in the coming years by giving them a private sector pathway for providing health care to their most vulnerable residents. That’s particularly important since many of the red states rejecting Medicaid expansion — including Texas, Mississippi, North Carolina, Florida, and Louisiana — have some of the highest rates of poverty and uninsurance in the country.

The Obama administration has also encouraged states to expand Medicaid by any means necessary, arguing that a failure to do so would hurt the working poor and safety net hospitals that cater mostly to uninsured patients. One such hospital in North Carolina has already announced its intent to shut down within six months, citing the state’s refusal to expand Medicaid.

To date, 25 states and the District of Columbia are moving forward or attempting to move forward with Medicaid expansion. Another 22 have refused, while three still remain in limbo.