In the case of Arkansas, it was Democratic Gov. Mike Beebe who asked to be allowed to privatize the Medicaid expansion funds, allowing them to be used to purchase private plans for qualified recipients. Beebe pursued this waiver from the administration, knowing that it was the only way the state's Republican legislature would approve providing coverage to a large chunk of Arkansas' low-income uninsured.
Sarah Kliff reports that at least four other states—Florida, Ohio, Louisiana and Maine—are considering the same model, and even Texas might be flirting with it. The governors of these state have been among the most rabidly opposed to Obamacare and obstinate about refusing it. This new plan for using the funds gives them an out, which is good for the people of those states.
If these four states signed onto the Medicaid expansion through the Arkansas option, the Urban Institute estimates that 2.4 million people would gain health insurance coverage.The Arkansas agreement hasn't been finalized yet, so it's possible that it will fall through in the end. If it is finally approved and implemented, it raises other key questions for the states, namely what happens after three years when the federal government isn't paying 100 percent of the expansion costs any longer? Will the states pick up the slack, or end the experiment? That's a key problem, if private insurers can't keep costs as low for the newly enrolled as Medicaid would have. The CBO has estimated that covering an individual on the private exchanges will cost about $3,000 more than Medicaid would cost.
That works out to about 15 percent of the overall Medicaid expansion population that Urban expects to gain coverage under this part of the health care law.