Arkansas Senate Passes Medicaid-Private Insurance Proposal

An Arkansas proposal to use Medicaid money to buy private insurance for poor residents was passed by the state Senate, aiding efforts to implement the Obama administration’s health-care overhaul in states with Republican-led legislatures.

Twenty-seven lawmakers voted for the legislation today, while eight opposed it, according to Senate spokesman John Reed. The bill now goes to Governor Mike Beebe, a Democrat who received informal approval Feb. 18 from the federal government to use money for Medicaid expansion under President Barack Obama’s Affordable Care Act to instead buy private coverage.

“You can expect the governor to sign this bill very soon,” Beebe’s spokesman Matt DeCample said. “This is what we’ve been working on for months.”

Republican-led states have resisted signing on to the Medicaid expansion since the U.S. Supreme Court last year gave them leeway to opt out. Arkansas is poised to be a template for other states considering a similar approach, said Sara Rosenbaum, a professor of health law and policy at the George Washington University School of Public Health. Republicans hold majorities in the Arkansas House and Senate.

Lawmakers in Texas, the second-most populous state, are mulling a bill similar to the Arkansas plan by using federal money to help poor Texans buy private insurance. While Texas Governor Rick Perry opposes expansion of Medicaid, state Representative John Zerwas and other Republican legislators are pushing for action before the legislature adjourns in late May.

Texas Coverage

Twenty-four percent of Texas residents don’t have health insurance, the highest percentage in the U.S., according to data compiled by the Henry J. Kaiser Family Foundation, a Menlo Park, California-based health research group. The uninsured rate in Arkansas is 18 percent.

“Texas is the ‘big fish’ and the problematic one,” Sheryl Skolnick of CRT Capital Group LLC said today in a note.

Shares of insurers that offer Medicaid plans for states, including WellPoint Inc. (WLP), gained April 16 after the Arkansas House passed the measure. Adding more customers should boost profit for insurers in 2014 and beyond, Skolnick said.

The Obama administration is likely to be as accommodating as the law allows out of fear that states won’t expand at all, Rosenbaum said.

Flexibility Sought

“It is very important at this juncture for the administration to be as flexible as the law permits it to be because of the far worse specter of having January 1, 2014, come along and finding out that the poorest citizens of the United States have no coverage,” she said.

The federal government is building part or all of the health-insurance exchanges in 34 states where governors or legislatures declined to do it themselves. The exchanges, market places where consumers can shop for health plans, are supposed to open on Oct. 1.

Medicaid is the joint-federal health program for the poor. An expansion of the program is a key component of the administration’s effort using the Affordable Care Act to provide coverage by 2017 for about 27 million Americans now without insurance.

To contact the reporters on this story: David Mildenberg in Austin at dmildenberg@bloomberg.net; Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net; Reg Gale at rgale5@bloomberg.net

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