On Medicaid, States Won't Take Feds' No for an Answer

Even though the federal government has repeatedly rejected certain health-care requests, many Republican-led states keep asking for them.
by | October 11, 2016
Kentucky Gov. Matt Bevin (AP/Timothy D. Easley)

Last month, to the surprise of no one in health policy circles, the federal government denied Arizona and Ohio's separate requests to adopt strict eligibility requirements for their health insurance programs for the poor.

What did surprise some health policy experts was what the states had asked for: The third year into Medicaid expansion, Republican-led states are still requesting changes that the Centers for Medicare & Medicaid Services (CMS) have repeatedly refused.

“It’s clear there’s an ideological component,” said Jesse Cross-Call, a health policy analyst for the left-leaning Center on Budget and Policy Priorities. CMS has made it clear that certain requests won’t be approved, “and state legislators know that, but they feel they should ask anyway."

In 2012, the U.S. Supreme Court gave states the option of expanding their eligibility requirements for Medicaid, a key component of the Affordable Care Act's goal to insure all Americans. Democratic-controlled states were quick to do so, but many GOP states resisted and have continued to push back.

To encourage the holdout states, the federal government let them tailor their Medicaid programs using a Section 1115 Waiver. Six states (Arkansas, Indiana, Iowa, Michigan, Montana and New Hampshire) have used the waiver to expand Medicaid while adding tweaks to appease their more conservative legislators. Those commonly include charging premiums, enrolling beneficiaries on the private marketplace and eliminating non-emergency medical transportation.

But states can't make just any changes they want. They have to be approved by the feds -- and they often aren't.

In Arizona, CMS squashed the state's hopes of making employment a condition for health insurance and setting a five-year limit for benefits. In Ohio’s case, the state wanted to drop beneficiaries who don’t pay into a health savings account. In both cases, the federal government had already rejected similar proposals from other states.

Aside from work requirements and time limits, CMS also has yet to approve waivers to deny certain services, like freedom of choice for family planning.

When denying near-identical requests over and over again, Andy Slavitt, acting administrator of CMS, usually issues the same statement. He says that such regulations would “undermine access to care and do not support the objectives of the program.”

But Arizona state Sen. Nancy Barto -- who advocated for the failed provisions there -- said there's a “serious problem of welfare benefits becoming an incentive not to work."

Requests like these continue.

Kentucky, for example, is asking for approval to add work requirements to Medicaid, despite the zero-percent success rate other states have had in requesting that from the feds. Kentucky's Republican leadership also wants to lock people out of plans if they don’t pay premiums. Indiana was approved for a "lock out," but it only applies to beneficiaries above the federal poverty line.

CMS is expected to reject Kentucky's terms. If that happens, GOP Gov. Matt Bevin has pledged to roll back Medicaid expansion, even though the state has been one of Obamacare's biggest success stories. Under Bevin's Democratic predecessor, the state was one of the first to expand Medicaid and had the nation's biggest drop in the uninsured rate when the law took effect.

Bevin campaigned on an anti-Obamacare platform. But in many other states, it's not the governor making these improbable requests. It's their much more conservative legislatures.

“The fight in Medicaid right now is a big fight within the Republican party,” said Joan Alker, executive director of the Center for Children and Families at Georgetown University.

GOP governors in Florida, Idaho, North Carolina, Tennessee, Utah and Wyoming have attempted to expand Medicaid only to face resistance from fellow Republican lawmakers, which has killed their sometimes yearslong efforts.

Right now, several of the 19 holdout states are debating whether to expand Medicaid traditionally or file a waiver that would appease conservative lawmakers but would likely get rejected by the federal government, sending everyone back to the drawing board.

Even if these states' waivers are approved, health policy experts worry that states may be taking on more responsibility than they can handle.

“When we start talking about adding premiums and savings accounts, there’s a lot of administration that goes along with that. So while hundreds of thousands of people now have care, are states taking on roles they aren’t ready for?” said Cross-Call.

In most cases, he said he would advise against waivers -- regardless of how likely the requests are to pass.

“There’s this impression that it’s all about waivers now, but there’s lot of evidence that straight expansion works really well. I think it could be a case of the simplest choice is the best choice."