Arkansas’ new Medicaid expansion is already seeing cost overruns

According to a recent analysis from the Foundation for Government Accountability (FGA), the “private option” Medicaid expansion plan in Arkansas (giving premium subsidies to mostly able-bodied, childless adults to help them purchase private health insurance) has begun seeing cost overruns in its second month of operation. Based on previous cost estimates done by consultants and state departments, the cost overruns are expected to continue. And despite Obamacare’s “promise” to cover 100 percent of Medicaid expansion costs in the first three years of expansion, these unexpected costs mean Arkansas taxpayers will pay millions more than they would have otherwise.

All of this is relevant to Utah because the Legislature is also considering a “private option” Medicaid expansion plan, albeit in a more limited fashion (only for those below 100 percent of the federal poverty line, rather than 138 percent like Arkansas’ plan). But Arkansas’ cost problems are still a warning for Utah because the underlying problems driving the costs are similar to those in what Utah is proposing: no incentive for Utahns to choose low-cost health plans and significant variations in insurance rates in the Obamacare exchange across the state.

What we see playing out in Arkansas is another reason that Utah would be logical and prudent not to expand Medicaid. At the very least, Utah should take a “wait and see” approach while other states unwisely rush to grab every federal dollar they can, without understanding what they (and their taxpayers) are getting into.