LITTLE ROCK — The Obama administration is willing to let Arkansas opt for an alternative to Medicaid expansion that would provide private insurance to an estimated 250,000 Arkansans instead of adding them to the state Medicaid rolls, Gov. Mike Beebe said Tuesday.
The leaders of the House and Senate both said Tuesday the news makes the possibility of an agreement on Medicaid appear more likely.
Beebe met with U.S. Health and Human Services Secretary Kathleen Sebelius in Washington on Friday. On Tuesday he met privately with legislative leaders and state officials to brief them on the meeting, then spoke to reporters.
Beebe said the federal government has given Arkansas permission to take the federal funding that would have gone to expand Medicaid to include people earning up to 138 percent of the federal poverty level and instead use it to pay the premiums for those people to buy private insurance through the state’s health insurance exchange.
"The feds have agreed to do what my legislators in various conversations have asked me to go ask them to do. Basically they’ve agreed to give us about everything we’ve asked for," Beebe said.
Under the original terms proposed under the federal Affordable Care Act, the federal government would pay 100 percent of the cost to expand Arkansas’ Medicaid program for the first three years, after which the state’s share would gradually increase to a maximum of 10 percent.
Beebe said Tuesday that Arkansas would still receive all of that federal money under the alternative proposal, so the cost to the state in the first three years would still be nothing.
Because private insurance generally costs more than Medicaid, the alternative proposal could be more expensive for the federal government than the original proposal. Beebe acknowledged that the cost to the state, when it kicks in, could also be higher.
But the governor added that the federal government would allow the state to opt out at any time if it chooses. He said the Legislature could approve the plan with a sunset clause that would require a vote on reauthorization in three years, when the state would begin to pay a share of the cost.
The state could charge the new beneficiaries co-pays, but the Affordable Care Act limits the co-pays according to the beneficiaries’ income levels, the governor said.
"One of the things that we’ve discussed is, you might want to not charge co-pays on behavior you would like to promote, such as wellness and prevention, and charge co-pays on things that you’re trying to discourage, like going to the emergency room," Beebe said.
Beebe said he was "not going to weigh in on whether I prefer to do it the straight Medicaid way or this way."
"My main objective is to make this Legislature as comfortable as I can make them," he said.
Beebe said Arkansans will be paying for Medicaid expansion through their federal tax dollars regardless of whether Arkansas participates, so he would prefer to see Arkansans receive a benefit for their money. The Democratic governor said the same conclusion has been reached by a number of his Republican counterparts who initially resisted expansion, including New Jersey Gov. Chris Christie, who announced his support for expansion hours earlier Tuesday.
A three-fourths majority vote in both chambers of the Arkansas Legislature is required to appropriate the federal funding for the expansion.
"If the majority would prefer to go this way to get this done, I’m happy with that," Beebe said.
Senate President Pro Tem Michael Lamoureux, R-Russellville, said after the meeting with Beebe that he was more hopeful for an agreement on Medicaid.
"I think this just confirms that we actually have a chance," he said. "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."
House Speaker Davy Carter, R-Cabot, said "we’re certainly moving the ball down the field."
"Generally, I think there would be more support for private plans than under the Medicaid coverage. There was some discussion about how procedurally that would work, and we do have a lot of work left to be done, but I thought it was very positive," Carter said.
Carter said that because of the governor’s news, he canceled a planned contract with a consultant who would have assisted the Legislature in analyzing the pros and cons of Medicaid expansion.
"It’s a whole new ballgame," he said.