LITTLE ROCK — Arkansas’ plan to use federal Medicaid dollars to buy private insurance for thousands of the state’s working poor will improve access to health care, strengthen personal responsibility and cut costs, the state Department of Human Services asserts in a draft of a waiver application to the federal government released Monday.

The application seeks a federal 1115 Medicaid waiver approving the so-called "private option" for expanding health coverage which the state Legislature approved earlier this year.

The federal Affordable Care Act proposed that states expand their Medicaid rolls to include people earning up to 138 percent of the federal poverty level — $15,856 for an individual or $32,499 for a family of four. Arkansas instead is proposing using federal Medicaid money to buy private insurance for that population, estimated at up to 250,000 Arkansans, through the planned insurance exchange.

The federal government would pay the fill cost of the plan for the first three years, after which the state’s share would increase gradually to 10 percent.

The Obama administration has given unofficial approval to the plan, but a waiver is still needed. DHS plans to submit its application to the federal government on Aug. 2, after a public-comment period that will run through July 24.

The agency also will hold public hearings on the draft application at the University of Arkansas for Medical Sciences in Little Rock on July 2 and at the University of Arkansas at Fort Smith on July 8.

"Arkansas is uniquely situated to serve as a laboratory of comprehensive and innovative health care reform that can reduce the state and federal obligations to entitlement spending," the draft states.

The draft asserts that beneficiaries of the private option will have access to health care comparable to the access enjoyed by others insured in the private market; will have more consistent access to preventive care than Medicaid beneficiaries; and will experience less "churning," or falling in and out of eligibility, than Medicaid beneficiaries.

It also claims that the private option will have costs comparable to what the costs would have been to cover the same population through the state Medicaid program; will drive down overall premium costs in the exchange; will improve the quality of health care; will reduce uncompensated care at Arkansas hospitals; and will promote "accountability, personal responsibility and transparency."

DHS hopes to receive federal approval of the waiver by Oct. 1, when enrollment is to begin in the exchange. Coverage is to begin Jan. 1.

The waiver is not the only possible hurdle for the private option. A group called Arkansans Against Big Government is gathering signatures in an effort to place a measure on the November 2014 ballot giving voters the option of repealing the enabling legislation for the plan.