(New throughout, adds comments from Beebe in Washington, House speaker on vote)
By Steve Barnes
LITTLE ROCK, Feb 24 (Reuters) - Arkansas lawmakers will try once again this week to provide funding for the state's Private Option medical insurance plan that has drawn interest from lawmakers in other states as an alternative to Obamacare.
The Arkansas Senate approved the $915 million appropriation for the Private Option plan last week, but the House narrowly rejected it in several votes last week. Governor Mike Beebe, a Democrat who helped craft the plan with Republican lawmakers who control the statehouse, said failure to pass the funding could blow a hole in the budget.
"The very Republican anti-Washington healthcare contingent, when all this came out, that didn't want a state exchange now has come to the conclusion that they want to reverse their position and do a state exchange," Beebe told a news conference in Washington on Monday.
He warned that failure to pass the funding could lead to a loss of $89 million in projected savings coming from the Private Option, prompting drastic cuts in services.
House Speaker Davy Carter, a Republican and a Private Option supporter, has expressed confidence that funding will eventually be secured. The House will probably vote on the bill on Tuesday, and every day after that until it passes, he said.
Beebe has warned that failure to continue the Private Option would make his proposed $5 billion state budget for the fiscal year beginning July 1 untenable, because savings the program anticipates would compensate for tax cuts Republicans demanded.
Last week, the 100-member House fell just a few votes short of the 75 votes needed to continue funding.
The program uses federal Medicaid funds from the Affordable Care Act, or Obamacare, to help buy health insurance for low-income Arkansans, many of whom would otherwise be assigned to Medicaid or have treatment costs absorbed by doctors and other healthcare providers.
The plan appeals to some conservative lawmakers who want to provide healthcare for the uninsured through the private sector rather than the federal Medicaid program. It also fits the Obama administration's goal of seeing states use federal Medicaid money to provide insurance for lower-income residents.
Both houses in the Arkansas legislature are controlled by Republicans opposed to Obamacare but divided on whether the Private Option is a reasonable alternative.
"Republican governors and Republican states and anti-Obamacare and anti-federal government healthcare folks are saying, 'Gosh, we need to do what Arkansas is doing'," Beebe said in a Reuters interview last week.
The Arkansas experiment has been adopted or considered in some form by states including Republican strongholds such as Utah, and battleground states in presidential elections including Pennsylvania, Michigan and Ohio.
Opponents in the Arkansas General Assembly said both the Private Option and the Affordable Care Act are too costly and represent an unacceptable expansion of government.
State Representative Nate Bell, a Republican from Mena, Arkansas, voted against the program in 2013.
He advocates passing the appropriation this year only with amendments such as eliminating money for advertising and marketing that advocates say is important to broaden participation and hold down costs.
The Democratic governor and the program's legislative advocates have accepted that such amendments may be necessary to win the additional Republican votes needed to keep it funded.
Senator Larry Teague, a Democrat from Nashville, Arkansas, and the co-chair of the legislature's Joint Budget Committee, said legislation with "any connection at all" to Obama's signature healthcare law is doomed among some Republicans. (Additional reporting by David Morgan in Washington, DC; Writing by Jon Herskovitz; Editing by Jan Paschal and David Gregorio)