5 States Shaking Up Medicaid in 2016

They're either debating or have already made big changes to their health-care programs for the poor.
by | January 19, 2016
Kentucky's new Republican governor, Matt Bevin, center, has promised to dismantle the state's Medicaid expansion program and insurance exchange. (AP/Timothy D. Easley)

In his last full year in office, President Obama is eager to cement his legacy of making more low-income Americans eligible for subsidized health care. Standing in his way are the 19 Republican-led states that have declined to expand Medicaid. That's why last week he proposed a new incentive for them to change their minds: more money.

Under the provisions of the Affordable Care Act, Obama's signature health-care overhaul, the federal government fully funded Medicaid expansion for states in 2014, 2015 and 2016. Starting next year, states will have to gradually pay 10 percent of the costs by 2020. But if any of the 19 hold-out states are willing to budge, Obama wants to guarantee them 100 percent federal funding for three years -- regardless of when they expand Medicaid.

Obama's proposal has to make it past Congress, where there's a real possibility of failure. But he's not the only one trying to shake things up in health care.

Several states are debating or have already enacted major changes to their Medicaid programs this year. Here are the five shaking things up the most:

Kentucky

Kentucky has been considered the Cinderella story of Obamacare. Kynect, the state’s online insurance marketplace, was one of the few that worked without major glitches when open enrollment first started. Despite the state’s conservative leanings, Kentucky was also one of the first to expand Medicaid, which can largely be attributed to the Democratic governor at the time, Steve Beshear. As a result, Kentucky experienced the nation's most dramatic drop in the uninsured rate from 2013 to 2014.

But in November, Kentucky elected a new Republican governor, Matt Bevin, who campaigned on a promise to dismantle the state's Medicaid expansion program and insurance exchange. Since then, he said he has plans for a "transformative Medicaid plan" that will be modeled after Indiana's. He also sent a letter to Health and Human Services Secretary Sylvia Burwell about his intentions to discontinue Kynect and force people to use the federal HealthCare.gov website instead. An HHS spokesperson said they are "committed to work with the state on a seamless transition."

Bevin's rhetoric so far raises a lot of uncertainty among health-care advocates and the public.

"I’m afraid that some of the soundbites on TV are going to discourage people from enrolling for this year," said Susan Zepeda, president of the Foundation for a Healthy Kentucky. "People might think his decision renders the 2016 enrollment period moot, which isn’t the case."

Arkansas

As states debated whether or not to expand Medicaid in 2013, Arkansas opted to try something different. Its Republican-controlled legislature and then-Democratic Gov. Mike Beebe decided to compromise, and the “private option” was born. With the feds' permission, Arkansas uses the federal funding for Medicaid expansion to help enroll people in private -- instead of public -- health-care plans. It was lauded as a way to satisfy both Democrats and Republicans and used as a model for expansion in several other states.

Fast forward a few years, and a storm is brewing over whether the state should keep the private option and how it should be managed. The current governor, Republican Asa Hutchinson, wants to keep the private option, but to satisfy the GOP-dominated legislature, he proposed adding premiums, asset limits and work incentives for the unemployed.

Hutchinson's plan is a blow to Democrats who believe the private option is working well and to the state's more conservative lawmakers who think any sort of expansion is unsustainable.

But even if the legislature approves Hutchinson's changes to the private option, it’s not guaranteed to get federal approval. Amid the uncertainty, Hutchinson has two budgets ready for the General Assembly: one that includes the private option -- and the federal money that supports it -- and one without it entirely.

 

Louisiana

While Kentucky's new governor promised to dismantle Obamacare, Louisiana's new governor campaigned on the promise to embrace it -- and he didn’t waste any time.

On his first full day in office last week, John Bel Edwards, the state's first Democratic governor since 2008, signed an executive order to expand Medicaid. That made Louisiana the 31st state to do so as well as the first in the Deep South.

Obama praised Edwards' decision on Thursday, saying “he’s already delivering for the people of Louisiana."

Montana

Montana, which officially expanded Medicaid in January, took a page out of Arkansas’ book by using federal Medicaid funds to help residents pay for private health insurance. But unlike Arkansas -- or any other state -- Montana decided to entrust a private insurance company to administer the expansion process.

Blue Cross and Blue Shield of Montana won the contract against three other companies. It will handle all of the administrative aspects of the process: enrollments, claims, grievances. The state, however, will still handle people covered by Medicaid pre-expansion, Native Americans, those with "exceptional medical needs" and people who make less than 50 percent of the federal poverty level.

North Carolina

North Carolina has had a unique health-care system in that it's behind the times. The state's Medicaid program has long relied on the fee-for-service model that many blame for high health costs. And, unlike nearly every other state, it has had no comprehensive managed-care system in place.

Until now.

North Carolina legislators approved an overhaul to Medicaid last year that will evolve into a managed-care system. The new statewide “prepaid health plans” will give providers a fixed monthly amount for each patient.

“Their whole infrastructure is going to look more like what most of the country is doing in terms of Medicaid managed plans,” said Matt Salo, executive director of the National Association of Medicaid Directors.

For the past 15 years, Community Care of North Carolina has been the primary managed care provider using a system of doctors, hospitals and other providers all broken into a system of 14 different regions throughout the state. While this model has been popular, state legislatures were ready to transition into a more traditional mold of managed care.

But before the overhaul can take place, state health officials are rushing to meet some deadlines. The Division of Health Benefits, a new office created to oversee the overhaul, only has three employees -- though five more are expected to be hired soon. By June 1, the state must submit requests to the feds to change the existing structure of Medicaid. It could take 18 months to get federal approval, and assuming the state gets it, it will have to wait another 18 months before the changes can officially take effect.

North Carolina is one of the 19 states that have refused to expand Medicaid, and that doesn't appear to be changing. Republican Gov. Pat McCrory has said he's open to expansion if he can get federal approval for "a North Carolina plan and not a Washington plan." But state Senate leader Phil Berger and state House Speaker Tim Moore have both said Medicaid expansion doesn't make sense at this time.

*This story has been updated.