HHS Signs Off On Arkansas’s Unique Medicaid Expansion Plan

September 27, 2013 8:25 a.m.

The Obama administration has approved Arkansas’ first-of-its-kind Medicaid expansion plan under Obamacare, a big development for the health reform law’s implementation because it opens the option for other states to expand health coverage without expanding Medicaid.

The federal Centers for Medicare and Medicaid Services, a part of the U.S. Department of Health and Human Services, announced the decision 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,” CMS spokeswoman Emma Sandoe said 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.”

Back in February, Arkansas was the first state to propose using the Medicaid expansion money to pay for low-income people to buy private health coverage on the health insurance marketplaces created by the law. Gov. Mike Beebe (D) offered the plan as a way of persuading his Republican-controlled legislature to agree to expand health coverage.

It quickly became a popular alternative for Republican officials who had been wary of expanding Medicaid outright.

Since Beebe first announced his plan, Republican governors in Iowa, Michigan and Pennsylvania have introduced similar proposals. They aren’t identical — Pennsylvania Gov. Tom Corbett has a long list of other reforms to Medicaid; Iowa Gov. Terry Branstad wants enrollees to make small co-payments — but HHS’ approval of Arkansas’ plan could be a good sign for their chances.

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GOP state officials in other states expressed an interest in an Arkansas-style plan, even though they didn’t ultimately propose one. HHS’ endorsement could spur more movement in those states when most state legislatures reconvened in January.

As with states doing a regular Medicaid expansion, the federal government will cover 100 percent of the costs for Arkansas’ plan over the first three years and never less than 90 percent after that. People with an income below 138 percent of the federal poverty level will qualify for Medicaid help. Up to 225,000 people are expected to be covered in Arkansas under the deal.

Arkansas had to meet a few conditions to get HHS’ OK. Most important, the private plans offered to newly Medicaid-eligible people must cover the same benefits as the regular Medicaid program. The Kaiser Family Foundation has a good rundown of all the specifics of the Arkansas plan (compared with Iowa’s) here.

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