A Florida Senate committee on Monday rejected Governor Rick’s Scott’s Medicaid expansion proposal.  Defeat has never looked so sweet to Rick Scott. The appearance of discord among Republicans aside, Scott can now return to the bargaining table with the Obama administration and demand an Arkansas-style privatization plan.

Scott’s proposal to the Florida Senate would have placed those persons made newly eligible for Medicaid by Obamacare into Medicaid managed care plans.  Movement towards private managed care plans (HMOs, PPOs) in Medicaid and Medicare has been the best Republicans could hope for in terms of moving entitlements towards privatization.  This has been true since 1965.  Not even Reagan could get Medicare vouchers passed in the early 1980s.  He settled for TEFRA and the wider introduction of risk-contracts, which have evolved into what we now know as Medicare Advantage.

So, as of a little more than a week ago, it looked like Scott had got himself and Florida the best deal possible.  Expand Medicaid – but at least do it through private insurance plans.

Enter Arkansas’ Democratic governor Mike Beebe and Secretary of Health and Human Services, Kathleen Sebelius.  In a tentative deal, Beebe and Sebelius agreed to an expansion plan that would see those persons now eligible for Medicaid pushed into the yet-to-be created health insurance exchange to purchase private health insurance.  This looks very much like a defined contribution or premium support program for a portion of Arkansas’ Medicaid population.  Surely Rick Scott was jealous.  

With his legislature having done him the favor of rejecting his initial proposal, Scott can now go right back to HHS and see what kind of deal he can get.  He will most definitely not be the last governor to go looking for an Arkansas deal of his/her own.  It will be curious to see how far the Obama administration will let this type of deal spread.  With the CBO estimate that the average private insurance plan costs $3,000 more than the average cost of a Medicaid enrollee, this could get expensive quickly.  Costs aside, there are political repercussions to consider.

On the eve of budget battles that are sure to see renewed conversations about Medicare vouchers/premium support, did the Obama administration just open the door to vouchers for Medicaid?  This isn’t exactly the best way to strengthen your argument against premium support.  Could the desire to increase the number of states signed on to the Medicaid expansion really be that important to the Obama administration?  As countless political scientists would tell you, fundamental shifts in the nature of an institution or policy often have very small beginnings.  Is this one such very small beginning? 

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