BEYOND THE NUMBERS
States Seeking to Expand Medicaid Through Waivers Can Learn From Arkansas, Iowa, and Michigan
The federal government is considering proposals from Pennsylvania and Indiana to adopt health reform’s Medicaid expansion through a demonstration project, or waiver, and New Hampshire will soon submit its own. The experience of the three states — Arkansas, Iowa, and Michigan — that have expanded through a waiver suggests that while the federal government will work with states to craft reasonable expansion plans, there are limits to the programmatic flexibility it will grant, as we explain in a new paper.
Waivers provide states with additional flexibility in how they operate their Medicaid programs, but they cannot be used to impose onerous requirements that make it difficult for eligible individuals to gain and maintain Medicaid coverage. This principle has informed how the Department of Health and Human Services (HHS) has responded to waiver proposals so far.
Among the takeaways:
- States may not disenroll people with incomes below the poverty line for non-payment of premiums. While Iowa has received approval to charge beneficiaries with incomes between 50 and 100 percent of the poverty line modest premiums starting in 2015, the state will waive premiums for individuals who complete health risk and wellness assessments or attest to financial hardships. Importantly, the state cannot disenroll individuals from coverage if they do not pay their premiums.
- States may not require individuals to pay cost-sharing charges above what is allowed under Medicaid rules. Medicaid cost-sharing rules provide states with significant flexibility while providing significant protections for beneficiaries that are intended to minimize barriers to necessary health care services. The rules include special protections barring cost-sharing for children and pregnant women and for certain services such as family planning, emergency services, and maternity care. People with incomes above the poverty line may be charged higher amounts, and providers cannot deny services to people with incomes below the poverty line who cannot afford to pay. States must apply these protections to the newly eligible adults regardless of whether states expand Medicaid through a waiver.
- States may not overly restrict certain benefits. States have significant flexibility regarding benefits for newly eligible adults and can largely align their benefits with the benefits that private market plans provide. Still, HHS has provided very limited waivers of Medicaid benefits. And in Arkansas and Iowa, which are enrolling some or most of their expansion populations in private plans offered in the health insurance marketplaces, HHS has required that states augment marketplace benefits to ensure beneficiaries have access to the same benefits than if they were enrolled in regular Medicaid.
- States can’t condition Medicaid eligibility on employment or participation in work search activities. In December 2013, Pennsylvania Governor Tom Corbett proposed a Medicaid expansion waiver that would require anyone working fewer than 20 hours a week to register with the state’s unemployment compensation program and engage in 12 work search activities per month to remain eligible for Medicaid coverage. Those judged not to be in compliance would have their health coverage revoked. Gov. Corbett subsequently submitted a revised proposal to HHS that would charge beneficiaries differential premiums based on whether they are working or engaged in work search activities. In response to Pennsylvania’s proposal, HHS has indicated that it is unlikely to approve waivers that condition either Medicaid eligibility or premium amounts on compliance with work search or other work-related activities.