The State Where Obamacare Stopped Working

Arkansas nearly found a compromise on Medicaid expansion. But now that deal is on the ropes, and that could be a very bad sign for proponents of expansion in other red states.

Arkansas resident Lori Latch, 35, said she was looking forward to having health insurance for the first time since she was a teen. (Brian Chilson/AP)

A few months ago it seemed like Arkansas had found an ingenious way to skirt its blood-red politics while extending health-insurance coverage to about 200,000 of its poorest citizens. While many other Republican states were rejecting federal funds to expand Medicaid under the Affordable Care Act, as I wrote a few months ago, Arkansas had instead used the federal money to allow the new Medicaid beneficiaries to buy private plans. This move satisfied both the Democratic governor, Mike Beebe, and others who wanted healthcare expanded, as well as the Republican-controlled legislature, which wanted to rely on the private sector. This so-called “private option” is now being considered by other conservative states as a potential route to expansion.

“We felt getting people off of the government program onto private insurance is better for the state, the providers, and most importantly, for the consumer,” Arkansas House Speaker Davy Carter, a Republican, told me at the time.

Since the private option passed, about 100,000 Arkansans have signed up for it. For some, it was the first time in years they had any type of health insurance. About a fifth of Arkansans under age 65 are uninsured. Nationwide, about five million people fall into the "Medicaid gap" created by states' opting out of expansion.

But like any good Obamacare saga, here’s where things spiral off into a confusing, strange Helicoid of Disagreement.

Because of a quirk in the state’s constitution, any appropriations bill—which includes the private option—must garner a 75 percent majority in the legislature. And now, some conservatives in the state’s House of Representatives are blocking the reauthorization of funds for the private option. Without approval, the program would fade out on June 30.

At a breakfast with reporters this morning, Governor Beebe said the private option’s failure would cost the state millions in higher medical bills for the uninsured.

How Arkansas' state insurance picture would have looked as of 2014, had the expansion gone forward. (Kaiser Family Foundation)

The state legislature plans to vote on the bill multiple times this week, so there’s a good chance it will pass eventually. But if it does, it will come with a major, and very controversial, change.

The revised bill would prevent the state from spending money on any outreach to potential beneficiaries related to either Obamacare or the private option, including any advertising, direct mail, or help from health-insurance assistants. That’s pretty significant, since mailed letters were a major part of the private option sign-up effort.

“Most of these outreach activities are fully federally funded,” the new language acknowledges, “But the state would not be able to spend those federal dollars.”

In other words, qualified people could still sign up for the private option, and those already on it could stay on, but the state would be forbidden from promoting it.

Arkansas state Representative Nate Bell, a Republican and one of the sponsors of the new language, readily admitted, "We're trying to create a barrier to enrollment."

On Twitter, people have been calling Bell a “sadist,” a “disgusting pig,” a “clown,” and worse.

I called Bell this morning, and two things are important to know about the change:

First, Bell does indeed oppose the private option and wishes it had never passed. He’s a self-proclaimed “budget hawk” and thinks the federal government should not be spending more on entitlements. (The Medicaid expansion is paid for almost entirely with federal funds. Because of that, Beebe said that giving up on Medicaid expansion would be “like paying the federal gas tax and saying, ‘that's fine, don't send any money back. We want to pay for the roads in California, but don't worry about our roads.’”)

Status of state Medicaid expansion decisions as of 2014. (Pew Charitable Trusts)

Second, Bell and his fellow conservatives aren’t out to kick people off Medicaid. Bell acknowledges that the appropriation will pass one way or another, and said that reneging on Medicaid for newly enrolled Arkansans would be “amoral.”

He did, however, air concerns about Medicaid that, whether or not you agree with him, will be increasingly important as red states weigh the consequences of expanding the program this year.

Bell said he thinks Obamacare has become “unstable” because President Obama has shifted a variety of ACA deadlines, including the cutoffs for mid-sized employers and individuals. He’s also worried about Obama’s promise to use “his pen and his phone” to push through executive actions.

The altered deadlines won't impact Medicaid much, but the negative press associated with the changes has helped the law's conservative opponents cast the entire law as an unreliable seismic event.

“I’m a builder by trade,” Bell said. “I would never go build the foundations of a building on unstable mud.”

He also said the program is, paradoxically, unfair to the working poor. Many of his constituents are self-employed, he said, so they have high net worths and low incomes.

“They think it’s unfair to see people driving a brand-new pickup, and they’re getting subsidized coverage,” he said, “But someone who works at McDonald’s might be a few dollars over.”

The goal of his amendment, he said, is simply to “freeze the expansion in time” because they don’t “want the program to get any bigger until there’s more stability.”

He also pointed to another, more pragmatic, concern. Some of the state’s lawmakers are considering congressional runs, and “in a GOP primary, supporting the private option is a very bad idea,” he said. “It’s just a death knell.”

A handful of red states are now attempting to tailor their own Medicaid expansions, adding requirements that beneficiaries look for work, for example, or stripping the program of some of its usual benefits. Some, like Virginia, are taking a cue from Arkansas and considering a private option.

These states already face a major hurdle in gaining the Obama Administration’s approval for their changes. The experience in the Arkansas legislature shows, though, that making Medicaid a little more Republican isn’t necessarily enough to appease the program’s harshest critics. And that could jeopardize these “Medicaid lite” expansions—as well as the health of the people who would be covered by them.