When the federal Affordable Care Act, better known as “Obamacare,” offered states a federal match of up to 90 federal dollars for every 10 state dollars spent adding able-bodied, working-age adults to the Medicaid welfare program, many Democratic-controlled states quickly fell into line.

But Republican-controlled states resisted due to the fact that the 10 percent match still threatened to create significant financial challenges for state governments, and many officials were also skeptical that the increased cost would translate into healthier outcomes for citizens.

Arkansas, led at the time by a Democrat governor working with a Republican-controlled legislature, was among the few Republican states to quickly embrace Medicaid expansion, although the state adopted a different approach. Rather than place more people into the traditional Medicaid program, Arkansas obtained a federal waiver and used its Medicaid-expansion dollars to purchase private insurance policies for the expansion population.

The result: The “private option” plan experienced significant cost overruns that often exceeded even the cost overruns occurring with traditional Medicaid expansion, and there was no significant change in health outcomes.

Now, the Arkansas model appears near its end.

The office of Arkansas Gov. Sarah Huckabee Sanders recently announced that the federal Centers for Medicare and Medicaid Services has declined Arkansas’ latest waiver request, which would have allowed the alternative-model program to continue until 2031. The “private option” model has been in place since 2013.

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.’ And it failed to deliver on every single one of its promises,” Nic Horton, founder and CEO of Opportunity Arkansas, wrote on X.

Among other things, Horton noted 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 covered by the pre-Obamacare, traditional Medicaid program.

And, he noted, the program “failed to improve health outcomes.”

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.”

A 2016 review by the Arkansas Center for Health Improvement reached a similar conclusion.

It was estimated that traditional Medicaid expansion would have cost around $3,000 per person annually. Instead, in its first year, the Arkansas expansion cost more than $5,800 per person.

The Arkansas Medicaid-expansion program had become known for rising costs and reduced consumer choice.

Only two insurers were participating in the program this year, and one of them, Centene, recently announced it would not participate in 2027.

From 2025 to 2026, the average monthly insurance premium in Arkansas for a medium-level silver plan purchased through Affordable Care Act marketplaces rose by $301 per month, hitting a cost of $774 per month, according to KFF.

Arkansas Senate President Pro Tempore Bart Hester, a Republican, said the alternative Medicaid-expansion program’s finances were unsustainable, according to the Arkansas Advocate.

“The feds can’t afford it. We can’t afford it,” Hester said.

Further, as noted by Horton, the program did not have any significant impact on health outcomes. 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 48th nationally for its health system performance. Arkansas ranked 42nd for health care access and affordability in the report, and only seven states had a higher share of adults going without medical care due to affordability. Arkansas ranked in the bottom 10 states for prevention and treatment, and ranked 49th on health outcomes and behaviors.

Horton said the end of “private option” Medicaid expansion provides state policymakers an opportunity to back away from the budget-busting folly of Medicaid expansion altogether.

“The great Obamacare expansion ‘private insurance’ nightmare is almost, finally, over,” Horton wrote. “Now it’s time for policymakers to resist the forthcoming, immense pressure to slap a new coat of paint on this failed program in an effort to save it.”

He urged Arkansas lawmakers to reject Medicaid expansion entirely, noting that “fundamental flaws will remain as long as this program exists in any form.”

“It’s time to finish the job—to fully right this wrong and wind down Obamacare expansion entirely,” Horton wrote. “That’s the only real conservative path forward.”

Oklahoma Facing Similar Challenges

The end of Arkansas’ “private option” Medicaid expansion comes as Oklahoma lawmakers are facing similar financial challenges from traditional Medicaid expansion, which was narrowly imposed through a public vote in 2020.

Due in part to Medicaid expansion, the Oklahoma Health Care Authority, which administers the program, requested a budget increase of nearly half a billion dollars at the start of the 2026 legislative session, a sum that threatened to rapidly deplete Oklahoma’s record savings if no changes are made.

Because of the dramatically surging costs of Medicaid and the lack of any significant improvement in health outcomes, Oklahoma lawmakers debated measures during the 2026 legislative session that would have allowed voters to remove Medicaid expansion from the Oklahoma Constitution and allowed the state to impose work requirements before able-bodied adults can qualify for Medicaid.

Rising Medicaid costs have not translated into better health outcomes in Oklahoma. In fact, a recent analysis found that the state’s death rate was higher in 2025, after Medicaid expansion, than it was in 2015, before Medicaid expansion.

States that have not expanded Medicaid to include able-bodied adults, such as Texas and Florida, have substantially lower death rates than Oklahoma.