The future of Medicaid under Health and Human Services Secretary Tom Price will soon become clear when the department decides whether Kentucky and Arizona can dramatically revamp their Medicaid expansion efforts.
Six states – Arkansas, Indiana, Iowa, Michigan, Montana and New Hampshire _ operate their Medicaid expansions through federal waivers, a system that allows them more flexibility to create policies designed to promote financial responsibility among enrollees.
Kentucky now wants an HHS waiver to impose a host of conservative policy changes, including work requirements for people using the program. Arizona’s waiver request seeks many of the same changes, plus a five-year lifetime limit on program benefits.
If Price’s department grants the requests as expected, the measures would mark the first time in the history of the program that benefits would be capped and Medicaid eligibility would be tied to work requirements.
50,000 The estimated number of people who would be dropped from Kentucky’s Medicaid program over five years if the Trump administration grants the state’s waiver request
Under the Obama administration, HHS routinely rejected states’ waiver requests for benefit limits and work requirements.
And the department should do the same with the Arizona and Kentucky proposals, said Leonardo Cuello, director of health policy at the National Health Law Center. He said neither met a basic requirement of waiver experiments and demonstrations: to further the objectives of the Medicaid program, such as improving coverage, health outcomes and access to providers.
Cuello called the current proposals “an attack on eligibility.”
Along with work requirements, Kentucky wants permission to impose premium contributions, enrollment waiting periods and “lockouts” that bar those with incomes above the poverty level from re-enrolling in Medicaid for six months if they don’t pay their premiums on time.
Kentucky cannot afford the cost of the Medicaid expansion program without this demonstration waiver.
Kentucky’s waiver application to the federal government
State officials estimate that Kentucky’s waiver proposals would cause more than 50,000 Medicaid recipients to lose coverage over the five-year waiver period. That would help the state save more than $2.2 billion, officials estimate.
“Kentucky cannot afford the cost of the Medicaid expansion program without this demonstration waiver,” the state’s waiver application said.
Arizona’s waiver request, which also calls for work requirements, would ban people from coverage for a year if they failed to report changes in family income or provided false information about meeting their work requirements.
Price and new Medicaid Administrator Seema Verma are making a sharp turn in the HHS department’s philosophy and policies. They’re encouraging states to follow Kentucky’s and Arizona’s leads and seek federal waivers to redesign their Medicaid programs. And they’re open to work requirements for healthy Medicaid recipients.
The overarching policy of the new administration would be favorable to these approaches.
Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities
In a letter in March to the nation’s governors, Price and Verma said they’d review and approve “meritorious innovations” for Medicaid “that build on the human dignity that comes with training, employment and independence.”
They’ve also pledged to streamline and expedite the waiver process, which can take more than six months.
“What I suspect is going to happen is that we’re going to see HHS say ,‘We’ll give you your (waivers for Medicaid) expansion, but we want you to include the following six elements.’ They’ll get very directive about what they want,” said Sara Rosenbaum, professor of health policy and management at George Washington University.
While much of Medicaid’s restrictive waiver activity targets the newly eligible Medicaid expansion population, “I think it’s safe to say that more of this stuff will be creeping into other Medicaid populations,” Cuello said.
Kentucky’s proposed work requirement would apply to all non-disabled adults ages 18 to 64 with no dependents. Medicaid enrollees who are “physically and mentally capable of working” would be subject to Arizona’s benefit limit.
Kentucky’s proposed work requirement would apply to all non-disabled people ages 18 to 64 with no dependents. Medicaid enrollees who are “physically and mentally capable of working” would be subject to Arizona’s benefit limit.
Indiana has asked HHS to extend its Medicaid expansion waiver. Officials in Indiana want permission to “lock out” people from coverage for six months if they’re late in recertifying their eligibility for the program.
“That’s never been allowed before,” said Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.
HHS denied a similar request by Indiana in August 2016 after a department analysis found the policy would knock nearly 19,000 people out of the program each year.
Most believe the department under Price will be more receptive to Indiana’s request.
“The overarching policy of the new administration would be favorable to these approaches,” Solomon said.
As a private consultant, Verma helped craft Indiana’s Medicaid expansion waiver that features premium contributions, coverage lockouts and enrollment waiting periods.
Indiana’s newly insured participants earning up to 138 percent of the federal poverty level pay premiums for coverage – sometimes as low as $1 or $2 per month – so they have “skin in the game” and develop greater personal responsibility for their health care.
But if they miss payments, they could receive lesser coverage or be barred from coverage for six months — even if they catch up with their payments. Supporters say those kinds of rules apply in the private market and that Medicaid recipients should face the same requirement.
Critics say the penalties reverse gains in coverage made under the Affordable Care Act, create additional barriers to care and cause many to lose coverage.
As Medicaid administrator, Verma won’t handle Kentucky’s or Indiana’s waiver requests, to avoid a conflict of interest since her consulting firm once worked for both states.