Pennsylvania’s Work-Based Medicaid Expansion Draws Ire of Health-Care Advocates

Pennsylvania is negotiating a Medicaid expansion proposal with the federal government that, if accepted, would be the only plan yet with work provisions.
by | April 17, 2014 AT 6:30 PM

Policy analysts and advocacy groups took their last chance before negotiations began between the federal government and Pennsylvania to call attention to provisions in the state's Medicaid expansion proposal that they view as harsh or illegal.

In September, Gov. Tom Corbett, a Republican, unveiled the first Medicaid expansion plan in the country to tie benefits to employment or work-search status. The original plan, which would use additional Medicaid funding to purchase private plans, also proposed a number of limits on coverage and premiums.

The final draft of the plan exchanged the work requirement for a voluntary incentive program that could reduce premiums, nixed some of those limits and reduced premiums. There’s no longer a limit on primary care visits, for instance, and the state dropped premiums for those earning between 50 and 100 percent of the federal poverty level. Federal Medicaid law prohibits states from imposing premiums on recipients who earn less than 150 percent of the federal poverty level, or about $36,000 a year for a family of four.

Under the Affordable Care Act, states can choose to expand their Medicaid programs to childless adults earning up to 138 percent of the poverty line. The federal government will pay 100 percent of the cost for new patients until 2017, when payments begin to phase down to 90 percent. States that want to make substantial changes to their Medicaid programs have to apply for waivers from the Centers for Medicare and Medicaid Services (CMS).

Since CMS granted Arkansas permission to run a private form of Medicaid expansion, other states under greater or total Republican control have sought ways to expand their programs in more politically feasible ways. Increasingly those pitches are including greater cost-sharing from recipients and unprecedented levels of flexibility to run the program, which is jointly funded by the federal government and states.

The level of cost-sharing, reductions to services and other more conservative reforms have drawn the attention of consumer advocates and policy analysts, particularly in the case of Pennsylvania. The vast majority of the nearly 800 comments submitted to CMS ahead of negotiations, which started Monday, were negative.

The Mental Health Association of Southeastern Pennsylvania, for instance, protested limits to mental health services, a 45-day limit on inpatient psychiatric hospitalizations and the elimination of “wraparound services,” which includes transportation for patients and contraceptives.

More than 10 state lawmakers wrote to CMS, objecting to a number of provisions, particularly the cost of premiums. Premiums for patients earning more than 100 percent of the federal poverty level are $25 a month for individuals and $35 a month for households with multiple adults. A group of 35 state and national organizations pointed out that those numbers exceed premiums costs on the private market for people earning around the poverty line, based on the Kaiser Foundation’s calculator tool. “Individuals who are making between 100 percent and 138 percent of the federal poverty level will be forced to choose between putting food on the table and having health insurance,” wrote state Sen. LeAnna Washington, a Democrat.

The group of 35 organizations, which includes March of Dimes and the National Alliance on Mental Illness, point out that even the toned-down work provision is outside the scope of the Medicaid program. Corbett described the change in a March 5 letter to CMS as a one-year pilot program that would lower premiums for those already working and for those actively pursuing work through the state's unemployment office. He made clear, though, that it would not be a condition of eligibility. “Programs aimed at connecting people to employment, however laudable, have no connection to the purposes of the Medicaid program,” the group wrote.

CMS already rejected Pennsylvania’s first attempt at work requirements and used similar language as the advocacy group when it denied a request from Utah in 2012 to tie benefits to community service hours.

That provision isn’t a red line for the Corbett administration, though, said Kait Gillis, a spokeswoman. “From what I understand, we’re looking for a flexible plan with cooperation from the federal government, and we don’t anticipate any [deal breakers].”

The Corbett administration argues the cost of Pennsylvania’s existing Medicaid program makes expansion without significant changes untenable. Some 2.2 million people are already enrolled in the program, costing the state about $21 billion a year, 30 percent of the state's overall budget. “What we needed to do was create a plan that we could sustain over time,” Gillis said. “We’re not looking at a quick fix.”

Negotiations officially started Monday, after the comment period ended. There’s no exact time frame set, and the length of time CMS needs before weighing in varies by the complexity of the plan and other factors. Gillis said she expects a quick turnaround, considering the level of communication between the state and CMS that’s taken place before talks officially started.