The ‘Private Option’ Medicaid Expansion in Arkansas Has Helped Reduce the Uninsured Rate and Uncompensated Care Costs While Boosting the State’s ACA Marketplace

A new issue brief from the Kaiser Family Foundation finds that Arkansas’ “private option” Medicaid expansion has helped reduce the number of uninsured and bring down uncompensated care costs while strengthening the state’s ACA marketplace. A Look at the Private Option in Arkansas draws upon early data as well as interviews conducted in spring 2015 with state officials, providers, insurance carriers, and consumer advocates to provide an initial look how implementation of the private option is going. Under the initiative, Arkansas became the first state in the nation to secure a federal waiver allowing it to require adults newly eligible for Medicaid under the ACA to enroll in private health plans offered through the marketplace, with the federal government paying the cost through premium assistance. This initiative has allowed Arkansas to cover 245,000 newly eligible adults. Arkansas political leaders have announced they will continue the initiative through 2016 while a state taskforce develops recommendations for the future, and the initiative continues to be closely-watched by policymakers in other states.  Among the issue brief highlights:

• Like more traditional Affordable Care Act Medicaid expansions in other states, Arkansas’ private option has helped spur a reduction in the uninsured rate among non-elderly adults, dropping from 27.5 percent to 15.6 percent, and a 55 percent drop in uncompensated care in the state’s hospitals, with Medicaid beneficiaries experiencing increased access to care.

• More unique to Arkansas, the private option has more than tripled enrollment in the Arkansas marketplace, helping to boost competition among insurers and contributing to reductions in premiums. Unlike many other states, Arkansas did not have an established Medicaid managed care delivery system prior to expansion. The private option also has proven more administratively complex to implement than a traditional ACA Medicaid expansion.

• Arkansas’ decision to operate a federal-state partnership marketplace gave the state the ability to shape and monitor plans, an important factor in implementing the private option. For example, stakeholders credited Arkansas with standardizing the marketplace plans’ cost-sharing design and making supplemental cost-sharing reduction payments directly to plans, protecting beneficiaries from having to make out-of-pocket payments upfront and then be reimbursed.

The full issue brief, as well as other resources on the Affordable Care Act and the Medicaid expansion, are available at kff.org.