Arkansas to end alternative Obamacare plan for poor

LITTLE ROCK, Ark. (Reuters) - Governor Asa Hutchinson of Arkansas has signed legislation that will end by 2017 the state’s innovative but controversial adaptation of the Affordable Care Act, which has provided nearly 190,000 residents with health coverage.

The federal government forms for applying for health coverage are seen at a rally held by supporters of the Affordable Care Act, widely referred to as "Obamacare", outside the Jackson-Hinds Comprehensive Health Center in Jackson, Mississippi October 4, 2013. REUTERS/Jonathan Bachman

Arkansas’ “private option” plan uses federal funds from the Affordable Care Act, also known as Obamacare, to purchase medical insurance for some low-income individuals, rather than assigning them to the state’s Medicaid program.

The new legislation requires a task force to study state funded health care spending and find alternatives to the program. Hutchinson, a Republican, signed it late on Wednesday.

The Affordable Care Act expanded Medicaid eligibility to Americans earning up to 138 percent of the federal poverty level, but a Supreme Court decision allowed each state to decide whether to participate in the expansion.

The Arkansas approach has been used as a template in other Republican-leaning states in which President Obama and Obamacare are unpopular.

But Democratic supporters of the option said that while an examination could prove valuable, it’s unlikely the program could be fundamentally altered without hurting the state’s budget.

That’s because the working poor insured under the program would have to be assigned to the Medicaid program at greater state expense, or again be without coverage.

“The fact is that private option is working,” said State Senate Minority Leader Keith Ingram, a Democrat. He said that Arkansas hospitals have reported a steep drop in uncompensated care since the option took effect in 2013.

Critics of the program said it had been granted only a stay of execution.

“It is financially unsustainable,” said State Senator Jim Hendren, a Republican who sponsored the bill.

Hutchinson, who took office last month, said ending the option this year not only would abruptly end health coverage for those enrolled, but jeopardize his proposal for a $100 million state income tax cut.

Although the private option was devised by Republican legislators working with Hutchinson’s predecessor, Democrat Mike Beebe, the plan was funded only after long and contentious debate.

Many newly elected members of the Republican-dominated state General Assembly campaigned against the plan, though a funding extension for the program through 2016 was easily approved.

Hendren agreed that an alternative to the option was “the most pressing issue.” But he warned that he and most other Republican legislators were still resolved to end the program in its current form.

Reporting by Steve Barnes; Editing by Mary Wisniewski and Chris Reese