Health & Human Services

The GOP Wants to Give States More Medicaid Power. This Is What They May Do With It.

Seven health-care policies you could see more of if the Affordable Care Act is replaced.
by | March 6, 2017
(AP/Molly Riley)

From the very first days of the Affordable Care Act (ACA), states have been trying to tweak their Medicaid programs. Now those tweaks -- the ones that succeeded and the ones that failed -- offer insight into the future of health care as President Donald Trump aims to give states more power to decide what their plans offer and how they function.

The ACA provided federal funding to states that agreed to expand the number of low-income people eligible for Medicaid. While nearly every Democratic-controlled state took the money, many Republican governors and legislatures refused it. To date, 19 states haven't expanded Medicaid. Some GOP states did -- but largely on their own terms.

Six states -- Arkansas, Indiana, Iowa, Michigan, Montana and New Hampshire -- received waivers from the federal government that let them customize their state's Medicaid program. There were some waiver requests, though, that the Obama administration rejected, concluding that they violated a law or would drastically limit poor people's ability to afford health insurance.

But during Trump’s first address to Congress on Tuesday, he pledged to give states more flexibility with Medicaid when he repeals and replaces Obamacare. This means that red states may finally be able to follow through with their goals that the Obama administration rejected or made more difficult to achieve. In addition, blue states may also use the added authority to enact more left-leaning policies without having to get federal approval.

It’s important to note that even though Trump and the GOP-controlled Congress want to replace Obamacare, they're struggling to agree on how. Handing more control over to states, though, appears certain to be part of any final plan. It's one factor in the replacement plan that House Republicans released on Monday. So here’s a look at what to expect if that promise becomes a reality.

Work Requirements

Requiring people to have a job before they can be eligible for Medicaid has long been the darling for conservative states. The Obama administration, however, rejected every such request they got.

Arizona and Kentucky are the most recent examples of states trying their luck with work requirements. Kentucky’s waiver request is still pending, so its chance of approval has risen under Trump. A handful of other states tried to institute work requirements over the years, and even more have voiced support for them.

In a 2015 interview with Politico, Arkansas GOP Gov. Asa Hutchinson said he supported work requirements because it’s “supposed to be an incentive and encouragement for people to work versus an incentive for people to just receive the government benefit and not be part of a working culture of Arkansas." (The state, however, ultimately didn't ask the Obama administration for a work requirement but Hutchinson announced on Monday his intent to ask the Trump administration to approve one.)

It’s worth noting a 2016 report from the nonpartisan Center on Budget and Policy Priorities that found work requirements did not get people out of poverty. Instead, voluntary work and education programs proved to be more effective.

Charging Premiums

Vice President Mike Pence’s home state of Indiana is one of seven states granted permission to charge Medicaid beneficiaries a premium. Since then, the architect of Indiana’s Medicaid expansion, Seema Verma, has been tapped by Trump to lead the Centers for Medicare & Medicaid Services (CMS).

Verma is a vocal advocate for charging premiums and other cost-sharing initiatives, so they would likely become more common, particularly in GOP states.

Health-care academics, however, warn that charging premiums is counterintuitive to Medicaid's mission.

“These are low-income populations by definition, so they are going to face challenges by paying a premium," says Joan Alker, director of Georgetown’s Center on Children and Families. "And if you’re unable to pay that premium, it’s likely because something is going wrong in their life."

There are differentiations between the states that charge premiums. In Indiana, for example, Medicaid patients can be denied insurance benefits if they miss payments -- but that's not the case everywhere.

Promoting Private Coverage

Arkansas is a model of bipartisanship surrounding Obamacare. In 2013, the state's Democratic governor and GOP legislature got approval to use federal Medicaid funds to help people buy private insurance plans. The compromise makes health care more affordable for many without increasing Medicaid rolls.

Iowa and New Hampshire (where the Republican legislature was blocking the Democratic governor from expanding Medicaid) followed Arkansas' lead.

The "private option" has largely been seen as a success. Arkansas had one of the biggest drops in its uninsured rate when the ACA first went into effect, and in Iowa, only 5 percent of the population is still uninsured -- down from 8 percent when the law took effect.

Healthy Behavior Incentives

Five states currently have some form of a healthy behavior program, which typically offers lower premiums or copayments for keeping up with wellness exams and immunizations. In the past, some states also extended vouchers or premium assistance for people who sign up for gym memberships, smoking cessation programs or nutrition classes.

There's one problem: No research backs up the effectiveness of health incentives. Both states and private insurers have tried them, and findings show that it’s a difficult incentive to pull off, and they often aren’t well-planned, says Alker. Four states, for example, eventually phased out their incentives when health outcomes weren't met.

Still, health incentives could be more attractive to some conservative lawmakers who aren't as keen on the more hardline approaches like charging premiums and instituting work requirements.

Single-Payer

Championed by U.S. Sen. Bernie Sanders, the concept of single-payer health care is pretty simple: It’s a state-run health system that covers everyone, generally by raising taxes. The idea has been floated for years but has yet to take off.

Most recently, Colorado had a single-payer option on the ballot last November, but it was resoundly defeated: 80 percent of residents opposed it. And in 2011, Vermont passed a law to become the first single-payer state -- only to abandon the effort in 2014 out of cost concerns.

Despite the uphill battle, lawmakers in California and New York have introduced single-payer legislation this year. This is neither of their first single-payer rodeos.

In 2006 and 2008, single-payer bills passed the California legislature but were vetoed by then-Gov. Arnold Schwarzenegger. And in New York, single-payer legislation has been debated during three different sessions but never made it to the governor's desk.

All-Payer

Not to be confused with the single-payer system, all-payer is meant to cut health costs and could see a revival if states are given more Medicaid power.

Instead of doctors billing an insurance company for every procedure, insurers give providers a lump monthly sum. The practice had a surge of popularity in the 1970s, but Maryland was the only state to hold onto it -- and it only applies to the state’s hospitals. Vermont, however, was granted a waiver last year to bring it back, and the state is currently piloting the program with 30,000 Medicaid patients.

While the effectiveness of a truly comprehensive all-payer system remains to be seen, some health policy experts worry about the future of innovations in health care. Dylan Roby, an assistant health professor at the University of Maryland, notes that the Trump administration has spoken negatively about the CMS Innovation Center, which negotiated the all-payer waivers.

“The center's role is to spur innovation," says Roby, "so if they lose that power, I don’t know where ... these types of waivers will be negotiated."

Delivery System Reform 

This may be one policy pushed by red and blue states alike. Health care is expensive for every state, and there’s been a resounding call from both sides of the aisle to revamp how it's paid for and delivered. That’s where Delivery System Reform Incentive Payment (DSRIP) programs come in.

Six politically diverse states -- California, Kansas, Massachusetts, New Jersey, New York and Texas  -- have undertaken some form of a DSRIP program in the past several years. They vary in size and scope, but the ultimate goal is to get health-care costs down while making populations healthier.

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