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Medicaid Meltdown! It’s Time for Arkansas to Rethink “Private Option” Model

In a new paper for FGA, Jonathan Bain highlights the major issues plaguing the Arkansas Medicaid system. 

Truthfully, no state that expanded Medicaid under ObamaCare is doing well. It’s resulted in busted budgets, hospital closures, lost jobs, and more.

The program was intended to help truly needy individuals like low-income children and people with disabilities, but expansion opened the door (more like the floodgates) to able-bodied adults who usually have other options for coverage. As a result, our country is on track to surpass 100 million Medicaid enrollees early this year. Every resource given to an able-bodied adult who isn’t working and doesn’t have children is a resource not available for the truly needy. 

Arkansas is facing all these same problems. But what makes Arkansas unique is its attempt at what is called the “private option model.” This model provides able-bodied adults with private health insurance plans purchased through the ObamaCare exchange and paid for with Medicaid dollars. 

First, there’s the ethical issue at play. By using Medicaid dollars—dollars intended for very vulnerable populations—to pay for able-bodied adults to get private insurance, the private option prioritizes able-bodied adults. These individuals, who could or aren’t working, are getting better health coverage than is available to truly needy Arkansans. How is that prudent?

Second, there’s the financial issue. Simply put, the private option is bleeding taxpayers dry. As Bain notes in his paper, there was an enrollment overrun of 36 percent. With that, Medicaid spending in Arkansas has ballooned by 60 percent since the year before expansion. In 2022, more than one in every four taxpayer dollars in Arkansas were spent on Medicaid—with expansion costing nearly $2.5 billion through November. Traditional expansion states aren’t faring much better, but the private option made things even worse.

Now that the pandemic-era Medicaid “handcuffs” are due to expire, Arkansas has an important opportunity ahead of it. It’s time for the state to regain control of its Medicaid program. Removing ineligible enrollees is going to be an important step, but policymakers can’t stop there. 

To protect taxpayers and preserve the program for the truly needy in Arkansas, the private model has got to go.

For more on Arkansas’s Medicaid program and how it can resolve its issues, read Bain’s paper here

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