Arkansas governor Mike Beebe, a Democrat in a state that's become extremely conservative in national politics, struck a deal with the Department of Health and Human Services yesterday that could pave the way for future further Medicaid expansions in red states.
The basic arrangement is that Arkansas will take the federal money on offer to drastically expand its Medicaid program, and use it not to expand Medicaid but instead to offer coverage to low-income Arkansas via the Obamacare exchange process. As David Ramsey writes, this arrangement "would potentially be a windfall for insurance companies, as well as hospitals, who would likely see higher reimbursements from private insurance on the exchange." It also might even be a good deal for low-income Arkansans! Medicaid is helpful to the people who get it, but it's a pretty low-quality program in terms of the benefits. The Arkansas arrangement will likely lead to higher out-of-pocket costs via copays, but a higher standard of care than you'd get under a traditional Medicaid arrangement.
But whether or not this is better policy on the merits than straightforward Medicaid expansion, the political dynamics seem clear enough. The fact that Republicans in deep red states don't want to accept free money to expand Medicaid will naturally leave health care providers in those states looking to Democrats. That coalition dynamic naturally leads Democrats to want to twist the proposal in a more provider-friendly direction. The fact that this entails getting HHS to "concede" something to the state further helps the red state Democrat position himself as in the middle between the local GOP and the Sharia Socialist in the White House.