Arkansas’ “Private Option” Is a More Expensive Way to Expand Obamacare

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Experts have long raiseArkTXd questions about the budget gimmickry involved in the Obama administration’s approval of Arkansas’ Obamacare expansion waiver. The Government Accountability Office even warned that the administration and Arkansas cooked the books to secure the waiver. But now, the state’s own evaluation of the program – spearheaded by one of the program’s architects – shows just how badly Arkansas got it wrong.

Billed as a “conservative” approach to growing the welfare state, Arkansas and the Obama administration colluded to violate federal budget neutrality protocols in order to push Arkansas’ waiver out the door. The “deal” allowed Arkansas to expand Medicaid eligibility to a new class of able-bodied adults under Obamacare but have Medicaid benefits delivered through Obamacare exchange plans instead of the fee-for-service system. (Originally, architects called the program the “Private Option,” although the program has now been rebranded as “Arkansas Works”, due to the political toxicity of the original name.)

The Government Accountability Office warned years ago that Arkansas’ expansion approach would cost taxpayers nearly $1 billion more than a typical Obamacare expansion, just during the first three years. It turns out that the GAO was actually too optimistic – the cost of expansion ended up being even higher.