U.S. clears Arkansas Medicaid expansion proposal

(Reuters) - The U.S. government approved Arkansas' proposal to use federal money targeted for expanding the Medicaid health program for the poor to help low-income residents buy private insurance under President Barack Obama's healthcare law.

The request was approved by the U.S. Centers for Medicare and Medicaid Services, the agency said on Friday. It will allow more than 200,000 uninsured state residents to receive government help to access health coverage.

"Arkansas and CMS worked together to find flexibilities that gave the state the tools to build a program that worked for them and their residents," CMS said in a statement.

Arkansas Governor Mike Beebe received a call Friday morning from Health and Human Services Secretary Kathleen Sebelius, who oversees CMS, informing him of the approval, according to his office.

"Now we will focus on getting this insurance to the Arkansans who need it to lead healthier, more productive lives," Beebe said in a statement.

Obama's Patient Protection and Affordable Care Act calls for expanding Medicaid eligibility to Americans earning up to 138 percent of the federal poverty level. A Supreme Court decision last year allowed each state to decide whether it would participate in the expansion.

Arkansas, Iowa and Pennsylvania have been seeking to modify the expansion, including the option of using the federal funds for the expansion to help their residents buy insurance on their own. Including Arkansas, 23 states and the District of Columbia have agreed to expand Medicaid under Obamacare.

The affordable care law aims to reduce the number of America's uninsured by almost half, or about 25 million people, in the next 10 years through the Medicaid expansion and state-based marketplaces offering subsidized coverage.

About 8.7 million new beneficiaries are expected to enroll in Medicaid in 2014 alone, while another 7 million are expected to buy insurance through the state exchanges. CMS said the Arkansas decision meant that most of the newly eligible Medicaid beneficiaries will buy their insurance on the state exchange.

(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and Tim Dobbyn)