Welcome to Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition — and read all previous columns here.

A few weeks ago, Arkansas put forward an unusual plan to expand Medicaid: It would use the health law dollars to buy private insurance for some 210,000 Arkansans expected to be covered under the program.

Now, about a half-dozen states are considering something similar. The approach could end up covering millions of Americans and may win over some of Obamacare's staunchest opponents. But there’s always been one big policy question hanging over Arkansas plan: How much would it cost?

The Congressional Budget Office estimated last year that private insurance plans cost about 50 percent more than the public program, $9,000 vs. $6,000 in 2022 dollars. This was right after the Supreme Court decision, and the office was trying to game out of the costs of a small population (those between 100 and 138 percent of the federal poverty line) buying private coverage instead of Medicaid.

That $3,000 price difference could be a hurdle, as federal regulations stipulate that Medicaid dollars can only be used to buy private insurance coverage if the two plans are of “comparable” prices.

While the Obama administration has some leeway in determining what counts as “comparable,” it’s difficult to see a 50 percent price differential fitting inside the definition.

But Arkansas doesn't think that 50 percent number is right at all. It recently brought on a team of actuaries to run through the question: How much more does it cost to move 210,000 Arkansas residents into private insurance coverage?

The answer they came up with: Not much at all. In fact, the costs might come out even.

“What we’ve found is that the difference is far less than the 50 percent that we have been discussing,” Arkansas Medicaid director Andy Allison told me in a Tuesday interview.

The Arkansas analysis is a short, two-page document that doesn't include information on methodology. It's hard to know about some of the assumptions in their math, which we'll run through below. It does, however, give clues into the case Arkansas will make in pitching the Obama administration in its plan.

To start, it finds that, at this very moment, private insurance costs 25 percent more than Medicaid in the state. That's a lot smaller than the gap estimated by the CBO last summer, and there's not much of an explanation given for why, aside from the fact that health costs vary across states.

"CBO estimated a national average for Medicaid costs and a national average rate differential between Medicaid and private carriers," the analysts write. "In both cases, that estimated differential is significantly larger than the actual differential in Arkansas."

That could prove good news for Arkansas. Starting off with a 25 percent difference is a lot easier than a 50 percent gap.

It also, however, suggests possible trouble for other states pursuing a similar approach, if they are among the locations dragging up the average national gap between public and private insurance costs.

Arkansas doesn't expect that 25 percent gap to stick around, either: The report argues that a bigger population on the exchange will lure more insurance carriers into the marketplace, thereby driving down the price of private insurance. The Arkansas report concludes that increased competition plus more aggressive health plan management will shave 10 percent off the difference between private coverage and Medicaid.

"Having all those people join the exchange will make it significantly more attractive to new carriers," Allison contends. "That depresses the rate differential than we found at the outset."

That gets Arkansas down to a 15 percent gap, which Allison estimates shrinks down to 13 percent when it excludes some of the especially high-cost patients, who are considered too fragile to move in the private insurance market and will stay in the Medicaid program.

Or, to put it in hard numbers: A Medicaid plan for everyone excluding those medically-fragile individuals would cost $4,392 in 2014, compared to $5,256 for a private insurance plan.

(If you do the math yourself here, you'll come up with a 19.6 percent difference between those two numbers. What gives? As David Ramsey explains in more detail here, it has to do with excluding the medically-fragile adults from the analysis, since they stay in Medicaid no matter how this decision gets made).

The Medicaid number that Arkansas comes up with does look in the range of what The Kaiser Family Foundation has previously estimated that per person spending will average out to $5,440 in 2016 (Arkansas has traditionally been on the lower end of per-person spending, with the sixth-lowest per capita spending in 2009).

Whether competition actually drives down the price of private insurance remains to be seen. The track record for such approaches isn't especially solid. As Julie Appleby and Marilyn Werber Serafini reported last year, Medicare has a better track record at holding down costs than health marketplaces, like the Federal Employees' Health Benefits Plan.

This is all on the side of how the Arkansas plan saves money — but there's also a second argument made in this report, that there are three cost-savings associated with the state's approach.

First, if competition does indeed drive down the price of health insurance in the Arkansas exchange, that's not just true for the Medicaid expansion population. Everyone else using subsidies on the exchange will also see lower prices. That, in turn, would lower federal spending on health insurance subsidies to the tune of $700 million over the course of a decade.

Second, the Arkansas plan could also save some funds by allowing the state Medicaid program to keep its reimbursement rates low. Right now, the it pays doctors about 10 percent less than the Medicare program. If the program had added hundreds of thousands of new patients, and needed to woo doctors into still accepting appointments, it may have had to increase those rates.

"You add those two factors together and it isn’t clear that this costs the federal government," Allison says.

In a news conference with reporters in Arkansas, he estimated that the federal government would spend as much as $120 million more on the private insurance expansion. Or, it could might not spend more at all.

That, in a nutshell, is the Arkansas case for a private Medicaid expansion. As to what happens next, the legislators actually need to send a formal proposal to the Obama administration. And then it's up to the Obama administration to judge whether Arkansas's math adds up.

KLIFF NOTES: Top health policy reads from around the Web.

Haven't gotten enough Arkansas news? Then you certainly need to read more thoughts from Adrianna McIntyre and Karan Chhabra at Project Millennial and David Ramsey at the Arkansas Times.

One Michigan health plan puts off exchange activity until 2015. "HealthPlus of Michigan has announced it will wait until 2015 to participate in a proposed online health exchange designed to meet federal health care reform requirements. In a written statement released Tuesday, March 19, Flint Township-based HealthPlus of Michigan officials said the company will still provide individual, group and government plans that meet requirements of the Affordable Care Act." Shaun Byron on MLive.

CVS wants to require workers to report their weight and glucose levels. "A national data privacy group is seeing red over a new CVS policy that requires workers who use company health insurance to report their weight, and body fat and glucose levels to the insurer — or pay a $600-a-year penalty." Christine McConnville in the Boston Herald.