Health & Human Services

6 States Hoping to Revamp Medicaid in the Trump Era

The Obama administration rejected many conservative politicians' attempts to alter the health-care program for the poor. With Trump in the White House, they may finally get their way.
by | May 15, 2017
Wisconsin Gov. Scott Walker, before he dropped out of the presidential race, presenting his plan to replace Obamacare if elected. (AP/Jim Mone)

While the Republican-controlled Congress is trying to repeal the Affordable Care Act (ACA), governors on both sides of the aisle are anxiously awaiting to see what happens. In the meantime, some are trying to make their own changes to the health-care system in their state -- and have the best chance of doing so in years.

To customize their Medicaid programs, states have been able to ask the federal government for waivers for decades. The Obama administration rejected many waivers, concluding that they were unconstitutional or would drastically limit poor people's ability to afford health insurance. For example, many states sought to make employment a requirement for Medicaid, but the Obama administration declined every such request.

With Donald Trump in the White House and Tom Price leading the Health and Human Services (HHS) Department, conservative states will likely see their long-denied wishes come true. Both officials support giving states more flexibility than the Obama administration, and a final bill to replace the ACA would likely increase states' power as well. So in the early days of the Trump administration, some governors enthusiastically submitted waivers.

Currently, there are many waivers waiting to be decided on, including a holdover from the Obama era. Some say that could be because there are still many federal appointee positions unfilled.

If some of these proposals get the greenlight as expected, they could drastically change the structure of Medicaid in their states and have national implications. These are the six states with planned or submitted waivers worth watching.

 

ARIZONA

If at first you don’t succeed, try, try again. That's what Arizona Gov. Doug Ducey is doing.

After the Obama administration rejected a waiver last fall that would have added work requirements and a lifetime cap for Medicaid, Ducey drafted an almost identical proposal once Trump assumed office. It would require "able bodied individuals" to be working or actively searching for a job. It would also set a limit -- in this case, five years -- to how long people can be on Medicaid throughout their lifetime.

Conservatives generally like the idea of work requirements because they worry about not incentivizing people to be employed. Liberals, however, often argue that people need to be healthy in order to work, so they're counterintuitive.

The journal Health Affairs estimated last month that 11 million people would lose their Medicaid benefits if work requirements were in place nationwide.

Ducey’s waiver is still up for public comment and is expected to be formally submitted sometime this summer.

 

ARKANSAS

Arkansas’ Medicaid expansion has been lauded as a national success, largely because of its bipartisan support and the fact that other conservative states used it as a model to make more low-income people eligible for government-sponsored health care.

But the state wants to undo its previous efforts.

Earlier this month, Gov. Asa Hutchinson signed into law a bill that -- if approved by the Trump administration -- will kick anyone above 100 percent of the federal poverty line off of Medicaid. Under the ACA, the federal government foots most of the bill for states that choose to cover people up to 138 percent of the federal poverty line.

The governor’s office says that would remove 60,000 people from Medicaid rolls with the expectation that they’ll instead buy insurance on the marketplace. It's unclear, however, whether subsidies would still be available for those 60,000 people.

“The history of throwing people off a government program, even if it’s just shifting them to another one, is murky. The assumption is that people will just go the marketplace, but a lot of people will just get lost,” says Judy Solomon, vice president for health policy at the Center for Budget and Policy Priorities (CBPP).

Like Arizona, Arkansas is also seeking to institute a work requirement for the program.

The state hasn’t signaled when it will formally submit a waiver to HHS.

 

FLORIDA

In the Sunshine State, Gov. Rick Scott is hoping to succeed even if Congress fails.

The bill that the U.S. House recently sent to the U.S. Senate would let states decide whether to switch to a block grant, which would give states far more flexibility and reduce the need for most waivers. Instead of waiting to see if that provision makes it into federal law, Scott already submitted a waiver to block grant Medicaid in his state.

Those in favor of block granting say it saves money and gives states more flexibility. Critics, meanwhile, argue that it puts more of a financial and administrative burden on states since federal funding generally isn't enough to cover all Medicaid costs.

There's one problem, says the CBPP's Solomon.

“As of now, as the Medicaid program currently exists, you can’t change that structure. You can’t block grant a waiver.”

The governor is also asking to change the existing waiver. The officials want to eliminate a requirement to retroactively cover the costs of newly eligible Medicaid enrollees and to nix mandates that “lead to duplicative work at the state and federal level for certified managed care rates.”

 

KENTUCKY

Like Arizona and Arkansas, Kentucky wants to make people work for Medicaid. Unlike the other two states, Kentucky has already submitted its request. In fact, the state submitted it in August.

Seema Verma, the woman overseeing Medicaid for the Trump administration, actually helped Kentucky design its waiver. Because of that conflict of interest, she's recused herself from the decision about its fate.

Kentucky Gov. Matt Bevin campaigned on taking away Obamacare, but as Congress is learning now, that promise is difficult to keep. So Bevin decided instead to dismantle the state-run health insurance marketplace and apply for a federal waiver for a more conservative Medicaid program.

If someone is out of work, the state's waiver would make Medicaid recipients undergo job training and volunteer work that would increase over time. For example, someone still unemployed and receiving benefits after one year would need to complete up to 20 hours to remain eligible.

 

MAINE

Maine's waiver, which is undergoing public comment until the end of the month, is one of the most conservative floating around.

The state is hoping to reintroduce asset tests, which are prohibited under the ACA. If approved, residents with assets of more than $5,000 would be ineligible for Medicaid.

Asset tests are considered extreme, and many conservatives didn't object when the ACA prohibited them. However, those in favor of them argue that someone with a certain amount of assets shouldn't be allowed to receive benefits. Others say that it's too subjective and an infringement on someone's personal situation.

Gov. Paul LePage is also proposing premiums higher than 2 percent of income for some recipients and would lock people out of their insurance for 90 days if they miss any payments. Beneficiaries without a job would only be allowed to receive benefits for 36 months.

But because of the asset-test provision, Solomon doesn’t expect this waiver will get the greenlight.

“A new administration doesn’t mean the rules can change that much," she says. "There are still limits; there’s still law. This isn’t open season for changing Medicaid."

Meanwhile, the state's voters will decide in November whether to expand Medicaid -- a move that LePage has vetoed seven times.

 

WISCONSIN

Scott Walker is attempting to go where no other governor has gone: drug testing Medicaid recipients.

If that part of his waiver gets approval from the federal government, it would have huge implications for Medicaid on the national level.

“It would transform the nature of the program fundamentally,” says Solomon.

Recipients who test positive for an illicit substance would be required to undergo a treatment program in order to keep their health care.

A represenative for Scott Walker's office told The Washington Post that the idea behind drug testing is to get people healthy so they can go back to work. However, opponents say it's just another roadblock before people can get in primary care.

“We want to support the treatment of people with substance abuse problems. But we have a lot of concerns about the implementations of these goals," says Lisa Olson, director of policy and programs for the Wisconsin Primary Health Care Association.

"This puts a lot of administrative steps in front of a patient in order to get health care. Getting people access to care should be as easy as possible," she says.

Other aspects of the waiver include small premiums for childless adults that can fluctuate if participants prove they don’t engage in risky behaviors like smoking and not wearing a seat belt. Like Maine, Wisconsin also wants to impose a time limit -- in this case, 48 months -- for unemployed beneficiaries.

Public comment for the waiver closes on Friday, and it’s expected to be submitted to the feds on May 26.

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