Arkansas is the only southern state to have approved Medicaid expansion. (Jahi Chikwendiu/The Washington Post/Getty Images)

With only a few months to go until the Affordable Care Act is fully up and running, many states remain on the fence about expanding Medicaid, the U.S. health program that provides medical coverage to low-income individuals and families.

But the state of Arkansas has provided an alternative means of expanding the program. Last week, it became the first state approved by the Obama administration to use federal money for the purchase of private insurance plans by certain Medicaid participants.

Rather than simply expanding the Medicaid program, Arkansas can use federal money to buy private health plan coverage through the state's new insurance exchange for adults with incomes up to 138 percent of the federal poverty level.

The state's version of Medicaid expansion, approved Sept. 27, could provide a template for states that have balked at expanding Medicaid and left millions of poor and uninsured people ineligible for both federal subsidies to help buy insurance on the health care exchange and Medicaid services.

"I think the Arkansas model has provoked a lot of discussion in other states," said Joan Alker, executive director of the Georgetown University Center for Children and Families, who pointed out that the governors of Georgia, Tennessee and Pennsylvania have cited Arkansas' plan as a potential blueprint for Medicaid expansion in their own states.

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Currently, 26 states are still undecided or have said no to expanding Medicaid. An analysis of census data by the New York Times found that as a result of not expanding the program, more than 8 million of the poorest Americans, including two-thirds of poor blacks and single mothers, and more than half of low-wage workers who do not have insurance, are not eligible for subsides under the new health care law because their incomes are too low. They also make too much money to be eligible for Medicaid.

Most of these states, which are mainly in the South and Midwest, are controlled by either a Republican legislature or governor.

Although the Affordable Care Act originally required states to provide expanded Medicaid coverage, last summer the U.S. Supreme Court ruled that Medicaid expansion would be left up to each state..

The federal government will cover the full costs of expanding Medicaid until 2016, after which it will pay no less than 90 percent of costs.

A spokeswoman at the Center for Medicaid and Medicare Services emphasizes that states can decide to expand Medicaid coverage at any time, even after the full implementation of the Affordable Care Act on Jan. 1, 2014.

"We're in round two now of the Medicaid expansion," said Alker. "The states that were going to accept federal [funding] right away did that last year. … What we're seeing now are states where you may have a split legislation [deciding] on coverage."

Arkansas, which has a Democratic governor and a Republican legislature, is the only southern state to approve Medicaid expansion.

Arkansas was approved under the 1115 waiver rule that gives the secretary of Health and Human Services authority to approve experimental, pilot or demonstration projects that promote the objectives of the Medicaid and the Children's Health Insurance Policy.

Iowa is also in the process of having a similar waiver approved with a slightly different coverage plan.

Alker said she believes that eventually all states will expand Medicaid to take advantage of federal money and points out that the state is still paying for the uninsured today .

"States are spending money on this [uninsured] population today," said Alker. They're not getting primary care up front that would be more cost effective way of treating them.

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