Slow Learners: Republicans Finally Learning They Can't Undo Obamacare

Arkansas Republican Gov. Asa Hutchinson said Thursday that the state must keep its pioneering Medicaid expansion plan.

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If you care about the politics of Obamacare and the future of health-care reform, Arkansas's new Republican Gov. Asa Hutchinson just gave one of the most important health-care speeches in recent memory.

For the past two years, Arkansas has played a significant role in getting a number of conservative states to accept Obamacare's Medicaid expansion. The state's previous Democratic governor, Mike Beebe, in early 2013 struck a deal with Republican state lawmakers and the Obama administration to use federal Medicaid expansion dollars to purchase private coverage for low-income adults.

Since then, more than 200,000 Arkansas residents have enrolled in what's known as the "private option," and it signaled to Republican-led states that they could craft alternative coverage plans to accept Medicaid expansion funding in their states. Bill Clinton, in a fall 2013 speech highly advertised by the Obama administration, called on Republican state officials opposing the Affordable Care Act to follow in Arkansas's example.

But a lot has happened in Arkansas since then. The Medicaid private option needs 75 percent support from the Arkansas legislature to continue each year, and it just narrowly received that support in 2014. The state last November also elected Hutchinson, who had previously refused to take a position on whether the state should continue the private option, which added an element of suspense to his Thursday morning speech.

After months of silence, Hutchinson provided a clear message — the state must keep the private option, though he will look for cost-saving reforms that gives Arkansas policymakers more flexibility to administer the program.

From a political standpoint, the important thing Thursday was Hutchinson's tone. He spoke candidly about the benefits of the private option — more people covered, a financial gain for the state's hospitals — and his concerns, namely how the state will afford the program when the 100 percent federal match eventually drops to 90 percent in a few years.

Also notable was his insistence that the state just can't just drop coverage for those who've gained it, and that the state's health-care industry can't tolerate ongoing uncertainty, year-to-year, whether coverage will be continued. Hutchinson called for a two-year extension of the private option in its current form, as a new task force will consider possible changes to the program.

"This avoids harm to the 200,000-plus in the private option, and it assures our hospitals and providers of financial stability," said Hutchinson, whose speech referenced several personal stories of those who've been aided by the coverage expansion. "The human side tugs at our heartstrings and is rightfully part of the debate," he said.

Those comments show the larger implications for Republican governors if the Supreme Court this summer overturns the health insurance subsidies provided through the federal-run ACA exchanges. That could disrupt new coverage for millions who'd no longer find health insurance affordable without subsidies, and it could be left to the states to fix the situation if Congress does nothing.

Whether three-fourths of the Arkansas legislature goes along with Hutchinson's plan is still a major unknown, according to the Arkansas Times' David Ramsey, who's reported extensively on the private option over the past two years.

As Hutchinson noted in his speech, the private option debate in Arkansas hasn't really cooled since its initial passage in 2013.

"Over the course of the last two years, we have been wrapped about the political axle," he said. "The phrase 'private option' itself has become politically toxic. It's almost impossible to have a constructive conversation about health-care reform in Arkansas without passions rising and folks taking sides."

Hutchinson didn't quite specify what sort of reforms he'd want the federal government to approve. As Ramsey reports, Hutchinson would probably seek out some sort of work-search requirements that Utah Gov. Gary Herbert (R) recently negotiated with the Obama administration.

As a Politico story noted last week, the Medicaid expansion in Arizona is threatened by a lawsuit at the state's Supreme Court, and the state's new Republican governor hasn't said whether he'll defend the expansion. And in Ohio, Gov. John Kasich (R) must convince Republican lawmakers to keep the funding going for the state's Medicaid expansion.

The details of Hutchinson's reform plan will matter. For the moment, though, he sent a pretty strong message that it's impossible to just cut off new coverage for hundreds of thousands of people.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.