implementation of health reform that may offer useful models for other
states. The first, and most remarked upon, is the “private option” for
Medicaid expansion, extending private health insurance to the state’s lower-income residents.8 The fact that insurance is provided by the private sector
rather than by the government makes the program politically palatable to
many conservatives.9 This “private option” has resulted in the highest
percentage increase in insurance coverage of any state.10 The second, lesser
known but perhaps equally important, is the Arkansas Payment
Improvement Initiative (APII). APII is a collaborative effort between the
public and private sectors to re-design health care payment systems. APII
re-orients provider incentives away from fee-for-service, with its incentive
structure that encourages wasteful unnecessary care, toward cost-effective
medical practice.11 The two initiatives are structured to be “symbiotic”; 12
each reinforces the other’s chances of success. Together, they illustrate
Justice Brandeis’s well-known observation that a “state may, if its citizens
choose, serve as a laboratory; and try novel social and economic
experiments without risk to the rest of the country.”13
Part II of this Article briefly describes the challenges Arkansas health
reformers face given the state’s below-average health status and health
insurance statistics and its political environment, against the background of
Arkansas’s particular legal constraints on government spending. Part III
tells the story of the development of the “private option,” the high-wire acts
by which a Democratic governor got the program enacted in 2013 and his
Republican successor kept it alive in 2015 despite a legislature increasingly
background, politics, policy development, and goals of the Arkansas program); Sidney D.
Watson, Out of the Black Box and Into the Light: Using Section 1115 Medicaid Waivers to
Implement the Affordable Care Act’s Medicaid Expansion, 15 YALE J. HEALTH POL’Y L. &
ETHICS 213 (2015) [hereinafter Watson, Section 1115 Medicaid Waivers]; Sidney D.
Watson, Medicaid, Marketplaces, and Premium Assistance: What Is at Stake in Arkansas?
The Perils and Pitfalls of Medicaid Expansion through Marketplace Premium Assistance,
102 KY. L.J. 471 (2013-2014) [hereinafter Watson, What Is at Stake in Arkansas?]
(examining Medicaid’s federal-state structure, regulatory guidance on premium assistance
for individual policies, and the potential benefits and drawbacks of Arkansas’s plan).
8. Medicaid Expansion in Arkansas, THE KAISER FAMILY FOUNDATION (Feb. 12, 2015),
9. See Leonard, supra note 7, at 432-37 (discussing the “Red State Narrative”).
10. See, e.g., Dan Witters, Arkansas, Kentucky Report Sharpest Drops in Uninsured
Rate (Aug. 5, 2014), http://www.gallup.com/poll/174290/arkansas-kentucky-report-sharpest-
11. See DEBORAH BACHRACH ET AL., ARKANSAS: A LEADING LABORATORY FOR HEALTH
CARE PAYMEN T AND DELIVERY SYSTEM REFORM, Commonwealth Fund Issue Brief (2014),
available at http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2014
12. Id.at 5 (quoting former Arkansas Medicaid director Dr. Andy Allison).
13. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).