Is Arkansas' Private Option on Life Support?
Since passage of the Patient Protection and Affordable Care Act (PPACA), states have been deciding whether to expand their Medicaid programs. To date, 25 states have decided to expand Medicaid, 21 states have decided not to expand at this time, and four states are currently considering expansion.
In 2013, Arkansas decided to take an unusual approach to Medicaid expansion. Called the “private option,” it expands coverage for newly eligible Medicaid beneficiaries through private insurers. While the plan was promoted as a market-oriented approach, free-market advocates have pointed out this expansion will cause many of the same problems as traditional Medicaid expansion, including massive and irreversible spending increases.
Over the past two years Heartland Institute experts, including Senior Fellow Benjamin Domenech, have noted the Arkansas model “is looking less like a game changer and more like a potentially cautionary tale about the vagaries of Medicaid expansion. Arkansas will still be dealing with a Medicaid program where everything is dictated by the federal government, on cost-sharing and everything else. It won’t have any control over the program, and it will push the 100–138 FPL population onto Medicaid instead of the exchanges. And here’s the real kicker: when the waiver expires, based on these extremely optimistic assumptions, HHS has already laid the groundwork for denying waiver renewal.”
Several states – including New Hampshire, Pennsylvania, and Utah – are considering adopting plans similar to Arkansas’. But even as these states consider adopting this ill-advised approach, Arkansas itself is considering whether to re-authorize funding for the private option. The state that pioneered this type of plan is considering dismantling it altogether ... and that should be reason enough for other states to be wary of going down a similar path.