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Model Arkansas way of expanding Medicaid at risk

Friday - 2/7/2014, 4:50am  ET

Associated Press

LITTLE ROCK, Ark. (AP) -- Arkansas' plan for expanding Medicaid by buying private insurance policies for the poor instead of adding them to the rolls was heralded as a model for convincing more Republican-leaning states to adopt a key part of President Barack Obama's health care overhaul.

But now, as Republican lawmakers face election season and step up attacks on what they deride as Obamacare, the state that pioneered the private option is on the brink of abandoning it. The plan has lost two supporters in the Senate, leaving backers worried that they won't have enough votes to keep it alive after the Legislature convenes Monday.

Rejecting the program could jeopardize the state's budget and reverberate through other states considering similar options for expanding Medicaid as the federal government wants. 

 "The ramifications are way beyond Medicaid and they're way beyond the people who would now go uncovered and they're way beyond the hospitals that would be severely impacted," Gov. Mike Beebe, a Democrat, told reporters. "The ramifications are huge, and the Legislature will have to figure that out."

Narrowly approved by the Republican-led Legislature last year, Arkansas' plan uses federal money to purchase the private insurance for those newly eligible under the new health care law. Republicans believed private insurers would administer the benefits more efficiently than the Medicaid program, which they consider bloated. Republicans also saw it as a step toward finding more options around Medicaid. 

 "Prior to Arkansas you had two options: expand Medicaid or don't," said Matt Salo, executive director of the National Association of Medicaid Directors. "With Arkansas going to the table, other states saw there's now a third option." 

More than 83,000 people signed up and now have coverage through Arkansas' plan. Thousands more are expected to enroll.

Other states have pursued similar compromises, with Iowa receiving federal approval for an expansion modeled in part on Arkansas and Pennsylvania exploring a similar plan. Utah Gov. Gary Herbert, a Republican, wants to expand Medicaid and is considering Arkansas' approach. Overall, 26 states have agreed to expand Medicaid while the rest, mostly Republican-dominated, have not.

In winning approval, Beebe compared the expansion to federal highway funding, saying that Arkansas taxpayers help pay for it so they should benefit.

But the takeover of a vacant state Senate seat by a Republican who vowed to kill the private option and a reversal by a former Republican supporter have threatened the thin margin of support.

Republican John Cooper, the new member, and others have said they don't believe the state can afford the 10 percent share it will eventually have to pay under the new federal law.

"I think it's going to be more detrimental to our state in the long term," Cooper said.

The Republican fire aimed at the health overhaul has also intensified as the 2014 elections approach.

"I now see it is leading us in the wrong direction," said Republican Sen. Missy Irvin, an earlier supporter who has changed her position.

Beebe, who has ramped up his speeches and private lobbying in an attempt to save the program, said that losing more than $915 million in federal funding for the expansion would be calamitous for the budget. He said the state is also counting on spending $89 million less to compensate hospitals for treating patients without insurance, and that the lost savings could mean serious cuts in other state priorities.

Human Services Director John Selig warned of damage to the state insurance market.

"If the private option goes away, I think you could see carriers leave Arkansas and you could see insurance rates rise for everyone," Selig said.

Republican opponents are skeptical of the consequences.

"That money wasn't there when we grew government, and I think we'd be ok if we cut it back," Sen. Bart Hester said earlier this month.

The suspense about the expansion's future has rattled some of those who have signed up for the coverage.

Lori Latch, 35, said she was looking forward to having health insurance for the first time since she was a teenager. She and her husband, who is self-employed, have racked up more than $5,000 in bills for emergency room visits.

"Financially, hopefully it's going to mean that we're not going to be in debt anymore," said Latch, 35. "I can't get a car or anything because of medical bills."

Health experts are watching to see whether Arkansas' decision affects other states weighing a similar expansion.

"I do think it would have national repercussions if it were defunded," said Joan Alker, executive director of Georgetown University's Center for Children and Families. "I think a lot of it will come down to the perception why it happened and we'll just have to see how it plays out."


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