Arkansas Gov. Mike Beebe Expands Medicaid by Not Expanding Medicaid

Published February 27, 2013

Democratic Arkansas Governor Mike Beebe is responding to Republican pressure in his state by moving forward with an interesting method of expanding coverage — one which essentially embraces the Obamacare Medicaid expansion without expanding Medicaid. Beebe is instead going to shift the state’s Medicaid population to the health insurance exchange:

Arkansas has a Democratic governor and a Republican legislature. As with many other states, the Republicans in the legislature have expressed deep (and sensible) skepticism about Obamacare’s mandate to significantly expand the Medicaid program in their state. Medicaid is a broken program that provides the worst health outcomes in the developed world, and its joint state-federal funding mechanism has encouraged waste, fraud, and abuse. Getting Republicans on board is especially important in Arkansas, where a three-fourths majority is required in both chambers of the legislature in order to sign on to the expansion.

As David Ramsey of the Arkansas Timesreports, Gov. Beebe has announced that “basically [HHS has] agreed to give us about everything that we’ve asked for. What that really amounts to is taking the Medicaid population that would be expanded…and use those federal Medicaid dollars and purchase insurance through the exchange. So they would buy private insurance through the exchange for the entire population, and [HHS has] given us permission to do that.”

To be clear, this is meaningfully different from what states like Wisconsin have done, in which Medicaid would be partially expanded in order to maximize the number of people on the exchanges. If the deal holds, Arkansas will not expand Medicaid at all, and instead offer subsidized coverage on the exchanges to the population that would otherwise have been eligible for Obamacare’s Medicaid expansion.

Republican leaders in the legislature expressed openness to the idea. “I think this just confirms that we actually have a chance,” said Senate President Michael Lamoreux. “I think if they had come back today and said no to all these questions, it would have probably been nearly impossible for us to get an agreement…Basically they’re not going to prevent us from doing what we think we need to do to make it work in Arkansas.”

House Speaker Davy Carter agreed. “We’re certainly moving the ball down the field…This is a 180-degree turn from what we thought were the options just a few weeks ago…Generally, I think there would be more support for private plans than under the Medicaid coverage. That’s something that my colleagues were very much in favor of…Everyone in that room, to my knowledge, thought it was a move in the right direction.”

“There was some discussion about how procedurally that would work, and we do have a lot of work left to be done,” continued Carter, “but I thought it was very positive…It’s a whole new ballgame.”

Shifting this population to the exchanges will cost more than Medicaid in the long run, but offer far better coverage and options than the state’s already overburdened Medicaid program would.