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Will This State Be the First To Expand Obamacare — and Then Take It Away?

Can it still be called “the Arkansas model” if it’s not actually Arkansas’ model?

Scarcely a year ago, the state seemed on the verge of jump-starting Republican support for Obamacare. Facing resistance from his GOP-controlled Legislature, Democratic Gov. Mike Beebe hammered out a deal to use federal funds to expand health coverage through the private insurance market, rather than under the Affordable Care Act’s Medicaid expansion.

The so-called private option was hailed as a viable plan that would appeal to GOP leaders holding more than two dozen statehouses — and holding out against Obamacare — across the nation. Arkansas subsequently obtained a special CMS waiver last fall to make the plan real. And since 2014 began, nearly 100,000 state residents have taken advantage of the private option to obtain health coverage.

But other states have been slow to deploy the Arkansas model, even as the private option itself — which needs to be renewed to continue past June — is suddenly in trouble.

One Arkansas Senate Democrat who supported the private option lost a special election last month. (A key issue in the race was whether the state was right to expand health coverage.) Meanwhile, a Senate Republican who backed the private option is now walking back her vote.

Because the private option made it past the state Senate by just a single vote last session, the model is “at best on life support,” state Sen. Linda Chesterfield (D) said recently. And if those two senators stand by their pledge to flip their votes, the private option is “dead on arrival,” she added.

Pulling Back Coverage: The Policy and Political Implications

The new battle over the Arkansas model is shaping up to be an early referendum on Obamacare’s coverage expansion, ahead of this fall’s election. Democratic supporters can point to data showing the private option is polling well in the state; newly insured residents want to keep their coverage; and businesses are in favor of the added federal dollars that it’s drawing down.

There’s also a practical problem if the private option is eliminated: Legislators accounted for the new Medicaid dollars when they passed a tax cut for this year, Beebe told Phil Galewitz of Kaiser Health News.

“If you don’t continue the private option, you still have the tax cuts and you are left with an $80 to $90 million hole in the budget,” the governor said.

But many Republicans say that’s just not sufficient reason to keep the private option in place, citing ongoing fiscal concerns or even invoking conservative principles.

“That money wasn’t there when we grew government, and I think we’d be OK if we cut it back,” GOP state Sen. Bart Hester said earlier this month.

The fight in Arkansas also may end up as a real-world test of pundits’ long-held theory: Once health benefits are expanded, it’s nearly impossible for lawmakers — given the political consequences — to take them away.

That truism isn’t entirely true. For years, leaders in practically every state have nibbled away at Medicaid programs in hopes of containing cost overruns. (Everything from limiting annual exams to rationing adult diapers.)

But when officials have drastically slashed benefits, the political fallout was more complicated.

  • When Texas cut CHIP enrollment by more than 150,000 children in 2003. The decision had few political consequences for Gov. Rick Perry, who was subsequently re-elected, but the Republican who introduced the legislation to cut the state’s health care program didn’t fare as well; Rep. Arlene Wohlgemuth lost her seat in 2004, after a challenger in 2004 attacked her hard-heartedness. Her rival’s stump speech: “She didn’t cut overhead — she cut kids.”
  • When Tennessee cut TennCare enrollment by more than 170,000 adults in 2005. It was the largest single reduction in coverage in the nation’s history, and according to research led by Northwestern University’s Craig Garthwaite, the move caused ripple effects in the labor market for the newly disenrolled. But there were few political consequences for Democratic Gov. Phil Bredesen, who was promptly re-elected to a second term — winning every county in the state.

Arkansas Model: A ‘Game-Changer’ Reconsidered

Meanwhile, the Arkansas model didn’t turn out to be the game-changer that some thought it would be.

While Iowa and Michigan based at least part of their coverage expansion plans on the private option — and lawmakers in New Hampshire, Pennsylvania and Utah have signaled their interest — many other Republican leaders haven’t opted to pursue the model for their own states.

Notably, Florida and Texas continue to sit out of the ACA expansion, effectively denying health coverage to more than 3.2 million uninsured residents.

But on closer examination, the “private option” may not even be a rational move for other states, notes Joan Alker, director of Georgetown’s Center for Children and Families. Arkansas lacks strong Medicaid managed care offerings, so funding private insurers to extend coverage and move into the Medicaid market is a reasonable decision, Alker points out.

However, “it makes little sense to assert that it would be better to pursue the Arkansas model in Pennsylvania to insert the private market into Pennsylvania’s Medicaid program,” Alker writes. “In reality, such an approach will merely make it more complicated for the state and beneficiaries alike to contract with the same companies.”

National Ramifications

In progressive states like California, there’s little chance of the Medicaid expansion being rolled back. But a blow to the Arkansas plan could embolden GOP leaders in states where coverage expansion has been less of a sure thing.

“I do think it would have national repercussions if it were defunded,” Georgetown’s Alker told the Associated Press last week. “I think a lot of it will come down to the perception why it happened and we’ll just have to see how it plays out.”

Meanwhile, Democrats continue to try and use a well-worn strategy: put a human face on cutting the program.

“We have about 100,000 Arkansans out there that now have health insurance and are counting on it,” House Minority Leader Greg Leding told David Ramsey of the Arkansas Times. “And I really don’t want to stand by quietly while people debate the possibility of taking that away.”

Around the nation

Here’s a quick review at what else is making news on the road to reform.

‘Epic fail’: ProPublica’s Charles Ornstein examines why four state insurance exchanges didn’t get off the ground.

Sitting out of the exchange: At “The Incidental Economist” blog, Nicholas Bagley explores the question of whether small employers can pay their staff to decline health coverage.

Mayors’ role in Obamacare: At Politico, Kyle Cheney explains why mayors might “hold the key” to coordinating enrollment efforts and navigating local politics.

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