Gov. Mike Beebe (D) told state lawmakers that federal health officials have green-lighted Arkansas’ request for flexibility with its Medicaid program and health insurance exchanges – a move that could provide billions of dollars to the poor and uninsured as well as boost the state’s health care economy.

In short, the big takeaway from Beebe’s meeting with U.S. Health and Human Services Secretary Kathleen Sebelius over the weekend was that Arkansas does have permission to explore using Medicaid expansion funds in its forthcoming health insurance exchanges.

Both enterprises are components of the controversial federal health care law. Last year’s U.S. Supreme Court ruling on the law’s constitutionality gave states the ability to opt in or out of expanding Medicaid with the feds paying all of the expenses for the first three years. The state would eventually have to pick up the tab for 10% of the costs by the end of seven years.

The health insurance exchanges that the Affordable Care Act created would allow for the uninsured to shop for subsidized health care plans in an open market system with private insurance carriers.

Medicaid expansion and the health insurance exchanges would begin in 2014.

Arkansas Dept. of Human Services Director John Selig said that Medicaid expansion would have brought uninsured Arkansans up to 138% of the federal poverty level under the program’s care. With the fed’s new position, which he said was “a surprise,” that population could obtain private insurance through the health exchanges with help from the same pot of federal funding.

It could require subsidizing plans or creating co-pays for certain medical situations.

LEGISLATIVE REACTION
Lawmakers who attended the meeting with the Governor on Tuesday (Feb. 26) said they were pleased to learn that many of their questions were answered at the Beebe-Sebelius meeting.

Senate President Michael Lamoureux (R-Russellville) said he was “optimistic” that a state solution could be found, although he wasn’t prepared to declare that the votes for passage exist in the State Senate. He said he would continue to allow the Senate Public Health Committee to work on the matter.

House Public Health Committee chair Rep. John Burris (R-Harrison) said he was pleased that the state had new options.

“New paths are available that weren’t available last month,” he said. “New options require new deliberations. Our waiting clearly provided better options for the state and consumers.”

Speaker of the House Davy Carter (R-Cabot) also expressed his satisfaction that the Medicaid debate could move forward with the news. He said he has asked the Bureau of Legislative Research to analyze budget numbers under the new calculations that the fed’s flexibility would provide.

He also indicated that the state’s position on health insurance exchanges may need a new look. When asked if lawmakers could revisit the current status of a federal-state partnership exchange versus a state-run exchange – which was rejected by Republican opposition in the 2011 session – Carter said, “Maybe.”

You can view video of Carter’s and Beebe’s comments to reporters in the daily Talk Business Arkansas update below.

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