Feds approve high-profile ObamaCare Medicaid waiver

The decision means Arkansas won't put residents eligible for the expansion on traditional Medicare, but will instead be able to offer them private coverage. 

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Arkansas Gov. Mike Beebe, a Democrat leading a deeply conservative state, crafted the option as a way to expand healthcare coverage without fully signing on to an expanded government program. 

His administration has been negotiating with the Centers for Medicare & Medicaid Services (CMS) for months over the waiver after the idea received an unexpectedly warm reception from Health and Human Services Secretary Kathleen Sebelius.

Several other states have been closely watching Arkansas's progress, and former President Clinton touted the state's proposal as an innovative option for states that are reluctant to fully embrace ObamaCare but still want to expand coverage for their residents.

The CMS approved Arkansas's request on Friday, allowing the state to move forward with a privatized Medicaid expansion.

"Arkansas and CMS worked together to find flexibilities that gave the state the tools to build a program that worked for them and their residents," the agency said in a statement. "We appreciate the collaboration with Arkansas throughout the process and applaud their commitment to providing Arkansans with access to high, quality health coverage."

Under the waiver, Arkansas will expand Medicaid to cover individuals whose income is less than 133 percent of the federal poverty line — the expansion contained in the Affordable Care Act.

But rather than placing those newly eligible residents on traditional Medicaid, Arkansas will offer them private coverage. Residents will be able to buy the private healthcare plans offered in the state's insurance exchange — the other half of ObamaCare's coverage expansion.

Iowa, following Arkansas's lead, has already proposed a similar waiver, and state officials have said Arkansas's plan could serve as a broader model.

A majority of states have signed on to ObamaCare's Medicaid expansion without waivers — including several states with high-profile Republican governors.