Arkansas's alternative to Medicaid expansion raises important questions about how HHS will implement new ACA waiver authority in 2017.

Abstract

This essay presents Arkansas's alternative to Medicaid expansion as a case study motivating John McDonough's assessment of the recommendations states may want to make to the Department of Health and Human Services regarding the implementation of statewide Patient Protection and Affordable Care Act-alternative waivers scheduled to begin in 2017. Arkansas's private option uses federal funds to purchase marketplace silver-level qualified health plans for low-income, low-risk participants, while "medically frail" adults are covered through Medicaid. By improving the size and risk profile of Arkansas's health insurance marketplace, the private option will also encourage entry of and competition among private carriers. If it succeeds in keeping insurance premiums below the level they would otherwise be in the marketplace, Arkansas's private option could reduce subsidy costs for the federal government. Under the broadened scope of section 1332 waivers, states will be able to capture such savings and use them to support innovation across both Medicaid-funded and Treasury-subsidized programs and populations.