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Alternatives to Medicaid expansion could be more costly

With the Florida House presently unwilling to support Medicaid expansion, legislators are finding inspiration from other states as they try to come up with an alternative solution.

Much of the focus is on Arkansas, which received preliminary federal approval to use Medicaid expansion dollars to purchase private insurance via health exchanges for 250,000 people.

In Indiana, the state wants to adding 300,000 people to its health savings account-based plan instead of Medicaid expansion. Iowa is asking to add an estimated 150,000 people to its low-benefit safety net program instead of Medicaid.

Florida is bigger than all three of these states combined. Roughly 900,000 people hang in the balance as the state debates whether or not it will expand Medicaid.

Avik Roy, a senior fellow at the Manhattan Institute for Policy Research, a conservative think tank, is a fan of the Arkansas plan. He thinks Medicaid is a failed program and the uninsured are better in private policies.

But Roy still has his concerns, what he calls the "$500 billion question." Pointing out that health exchange plans are roughly 50 percent higher than Medicaid -- $9,000 compared to $6,000 on average -– Roy said Arkansas could take money away from other states.

"The question is how much more expensive it’s going to be and how much more it’s going to cost taxpayers in other states to cover this pretty different approach," Roy said.

After the first three years, states will begin paying a portion of their Medicaid expansion costs up to 10 percent. That means these alternative plans could be a bigger drain on state budgets compared to current projections.

The Indiana model might be a more cost-effective way to go for a big state like Florida, Roy added.

The Arkansas Legislature still needs piece together a complete program and submit it to the U.S. Department of Health and Human Services for final approval.

Bo Ryall, president and chief executive of the Arkansas Hospital Association, said his Medicaid expansion-supporting organization is still studying Gov. Mike Beebe's plan. But the initial reaction has been positive since the Republican-controlled Arkansas Legislature has made it clear growing Medicaid isn’t on the table.

"Bottom line to us is having people covered," Ryall said. "I’m sure Arkansas and Florida are no different in the uncompensated care that hospitals face, the cuts that hospitals face."