Arkansas's experiment with a "private option" approach to Medicaid expansion cost more than $5,800 per person in its first year, nearly double the $3,000 annual estimate for traditional Medicaid expansion, according to a new report from the Georgia Public Policy Foundation. The federal government recently denied Arkansas's request to extend the program through 2031, marking what appears to be the end of the state's alternative model. The report warns other states against adopting similar big-government programs marketed as conservative alternatives.
When Arkansas accepted Medicaid expansion under the Affordable Care Act, state leaders created a waiver program that used expansion dollars to buy private insurance policies for able-bodied, working-age adults rather than enrolling them in traditional Medicaid. A 2014 review by the U.S. Government Accountability Office found the three-year spending cap approved for Arkansas's "private option" was roughly $778 million higher than what the limit would have been under the state's actual payment rates for services delivered to adult recipients in traditional Medicaid. Exchange plans in Arkansas now run $774 monthly, or $9,288 annually, the report notes. Only two insurers participated in the Arkansas Medicaid-expansion program this year, and one recently said it won't take part in 2027.
The program "failed to deliver on every single one of its promises," according to Nic Horton, founder and CEO of Opportunity Arkansas, whom the report quotes. The report states that the model gave able-bodied adults "luxurious private insurance plans" while driving premiums sharply higher for Arkansas families and placing able-bodied adults ahead of the truly needy in line for medical care. Health outcomes tell a similar story: before Medicaid expansion, Arkansas ranked among the bottom 10 states nationwide for health outcomes, and after expansion, it remained there. The Commonwealth Fund's 2025 Scorecard on State Health System Performance placed Arkansas in the bottom 10 states for prevention and treatment and 49th for health outcomes and behaviors.
The report explains that Arkansas's approach emerged from a collaboration between a Democrat governor and a Republican-controlled legislature seeking a supposedly conservative path forward. Republican officeholders sometimes abandon free-market principles once in power, believing a big-government plan designed by Republicans will perform better than one designed by Democrats. The Arkansas case demonstrates the weakness of that reasoning. The state's massive cost overruns came alongside stagnant health outcomes, shrinking insurer participation, and higher premiums for ordinary families. Arkansas proves that rebranding expansion doesn't change its fundamental problems and offers a cautionary tale for officials tempted to pursue similar compromises.