Health Care

Arkansas's costly Medicaid lesson provides warning for Oklahoma

August 17, 2026

Jonathan Small

When the federal Affordable Care Act, better known as “Obamacare,” passed, it offered a much higher federal-state match if states expanded Medicaid welfare programs to include able-bodied, working-age adults. 

Arkansas, led at the time by a Democrat governor working with a Republican-controlled legislature, came up with a supposedly “conservative” alternative. Rather than enrolling more people in the traditional Medicaid program, Arkansas obtained a federal waiver and used its Medicaid expansion dollars to purchase private insurance policies for the expansion population.

It didn’t work as promised. The Arkansas model quickly became notable for major cost overruns, even as health outcomes remained largely stagnant.

It appears that the experiment is near its end. The federal government has denied Arkansas’ latest waiver request, which would have extended “private option” Medicaid expansion to 2031.

One top policy expert welcomed the news.

“This failed model—crafted by Democrats and marketed by legislative Republicans as a ‘solution to Obamacare’—gave able-bodied adults luxurious private insurance plans instead of ‘regular Medicaid,’” Nic Horton, founder and CEO of Opportunity Arkansas, wrote on X. “And it failed to deliver on every single one of its promises.”

Horton said the program had “driven premiums through the roof for Arkansas families” while also placing “able-bodied Arkansas adults at the front of the line” for medical care ahead of the truly needy.

From the very beginning, the Arkansas version of Medicaid expansion had dramatic cost overruns. 

In a 2014 report, the U.S. Government Accountability Office reviewed Arkansas’ Medicaid expansion and found that the three-year spending limit approved for Arkansas’ “private option” Medicaid expansion was “approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services provided to adult beneficiaries under the traditional Medicaid program.”

It was estimated traditional Medicaid expansion would have cost around $3,000 per person annually. In its first year, Arkansas “private option” expansion cost more than $5,800 per person. Exchange plans in Arkansas now cost $774 per month (or $9,288 per year), according to one report. 

Only two insurers were participating in the Arkansas Medicaid-expansion program this year, and one recently announced it would not participate in 2027.

Before Medicaid expansion, Arkansas’s health outcomes were ranked among the bottom 10 states nationwide. After Medicaid expansion, they remained there. The Commonwealth Fund’s 2025 Scorecard on State Health System Performance ranked Arkansas in the bottom 10 states for prevention and treatment and 49th on health outcomes and behaviors.

Republicans typically run as opponents of big government, but once in office, some succumb to the idea that a big-government plan produced by Republicans will work better than a big-government plan produced by Democrats.

Arkansas proves the folly of that idea and serves as a warning to officeholders tempted to abandon their free-market principles.