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In a desperate attempt to keep the Obamacare Medicaid expansion alive, supporters are trying to break the logjam by suggesting states pursue an “Arkansas model.” However, there are several reasons why it is still a bad idea:

  • Accepts the expansion and funding. Supporters of the Arkansas plan suggest it is an alternative to the Obamacare Medicaid expansion. This is hardly the case. The Arkansas plan would agree to the full expansion of up to 138 percent of the federal poverty level (FPL) and would draw down on the new federal dollars. The Medicaid expansion would add millions to a government program that is struggling to meet the needs of its current enrollees and would fuel the country’s entitlement crisis by accepting new federal funding promises that the country simply cannot afford.
  • Medicaid rules still apply. Supporters argue that the Arkansas plan is not Medicaid, but it is clear that states must still provide Medicaid level benefits and protections. In its Good Friday memo, the Centers for Medicare and Medicaid Services clarified, “Under all these [premium support] arrangements, beneficiaries remain Medicaid beneficiaries and continue to be entitled to all benefits and cost-sharing protections.” Thus ruling out any real deals for the states.
  • Details matter. Supporters imply that passage of an Arkansas-like plan through a state legislature makes it a done deal. Again, far from it. The state must still receive, in writing, official approval from the federal government, including Arkansas. And any agreement “in principle” is still not an official agreement. While there are limited instances where a state could submit a premium support plan without a waiver, the Secretary of Health and Human Services must still review such agreements and could still require a state pursue a more cumbersome waiver process.
  • Private coverage in name only. Supporters argue that the Arkansas plan is based on conservative ideas of integrating private coverage. However, any idea that coverage offered through the Obamacare government exchanges is private coverage is wishful thinking. The private plans offering coverage in the exchange must meet new federally defined benefits and regulations. In essence, the private plans in the exchanges are simply administering the government options.
  • No clear way out. Supporters of an Arkansas-like plan suggest the states can always back out of the deal and expansion if terms turn sour. However, it remains unclear whether any so-called sunset or escape clauses are viable. As two legal experts warn, the Supreme Court’s decision could be interpreted as voluntary to enter into the expansion but once accepted the expansion population may be mandatory.

None of this, of course, resolves the obvious issues that states would be taking on more responsibility, more obligations, and more spending than they otherwise would have. The Arkansas plan is a distraction from the real problems facing Medicaid. Rather than adopting the Obamacare Medicaid expansion, states should instead focus on addressing the deficiencies and challenges of those people currently served by Medicaid.