Healthcare expansion could be in store for a new tagline: As goes Arkansas, so goes the nation.

Arkansas is responsible for the biggest Medicaid change since the U. S. Supreme Court made the healthcare reform law's Medicaid expansion voluntary. The U.S. Department of Health & Human Services gave Arkansas approval to allow its Medicaid expansion population to buy private insurance through the exchange. Democratic Gov. Mike Beebe gauged the Republican-led legislature for what its members would find acceptable, and the private coverage option emerged.

We can debate the merits of spending $9,000 annually per member versus $6,000 under Medicaid. But in places where a straight Medicaid expansion is a non-starter, helping the expansion population buy private coverage could be palatable. Following the HHS ruling, even Texas? staunch opposition to any expansion softened considerably. Texas lawmakers have suggested negotiating with the federal government about reforming the program and customizing it for Texas. Southern states could show similar interest.

Healthcare innovations tend to get assimilated quickly by other players. If Arkansas goes forward, other states won?t wait for results. But that could come with some pitfalls.

Traditionally, the Medicaid population skews older and sicker than those with private coverage. Childless adults would come into exchanges without having any previous insurance coverage, and could have multiple untreated conditions. This could increase the risk of adverse selection in exchanges. Any state pondering the Arkansas option should not forget that catastrophic claims and high utilization can quickly turn problematic. Many of those big claims would come during the first three years, when the federal government still pays 100 percent of member costs.

As the state share for Medicaid spending rises to 10 percent in 2020, there could be other pitfalls. To cover the state share, would members face premiums or even deductibles for Medicaid services? The financial hit could force people from the program.

Those issues about financial risk need to be ironed out, but other states may mimic Arkansas? request before that happens.

HHS's willingness to work with states reticent or hostile to Medicaid expansion could bring coverage to many more uninsured people. Although it is fraught with unknowns, Arkansas could just have blazed a Medicaid expansion plan for a dozen other states.

Follow Bill Melville on Twitter at @BillMelvilleHLI

 

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