Arkansas Accepts Medicaid Expansion, But Not Via Medicaid

| Thu Feb. 28, 2013 2:12 PM EST

Ed Kilgore, once again directing his gimlet eye at goings-on in his native South, points us today to a report that Arkansas plans to accept the full expansion of Medicaid that's part of Obamacare. The gotcha is that Arkansas' Republican legislature is insisting that instead of receiving traditional Medicaid, all the new beneficiaries will get benefits via private insurance purchased on Obamacare's exchanges. This will almost certainly be more expensive, but apparently Republicans are so enamored of a private solution that they're willing to accept this.

Ed is pretty gobsmacked by that, but I'm a little more willing to wait and see how it works out. In particular, I happen to think this may solve a legitimate problem. Here's the tail end of an article in the Arkansas Times:

Department of Human Services Director John Selig speculated that things would actually run more smoothly. "The most difficult part of the exchange was going to be people going from Medicaid to private insurance, back and forth as they went up and down [the] income line," he said. "Now, you just keep [the private insurance company] as you go up or down. In a lot of ways this simplifies what happens on the exchange."

This really is an issue with the Medicaid expansion, and it's a well known one. If you're at 130 percent of the poverty level this year, you qualify for Medicaid. If you get a raise and go up to 140 percent next year, you no longer qualify and instead have to navigate the exchanges. If your hours are cut back and you fall to 130 percent again the year after that, it's back to Medicaid.

How big a deal is this? That's hard to say. But it's not a made-up issue, and it's possible that the Arkansas approach could legitimately be better. What's more, I'm OK with allowing states to experiment within limits. It's the only way to find out whether or not the exchanges really are more expensive, and whether or not the Medicaid ping-pong really is a serious problem. The ideology behind this decision might be misguided, but there's a good chance we'll get some useful data out of it regardless.

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