Editor's note: This post is part of a Health Affairs Blog Symposium on Health Law stemming from 4th Annual Health Law Year in P/Review conference hosted by the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School. Holly Fernandez Lynch wrote an introductory post in January 2016 and you can access a full list of symposium pieces here or by clicking on the "The Health Law Year in P/Review" tag at the bottom of any symposium post. You can also watch a video of the presentation on which this post is based.
Nearly six years after the passage of the Affordable Care Act (ACA), health law and policy experts continue to painstakingly track the progress of the Act's Medicaid expansion. The original intention of the ACA was to expand Medicaid in every state, leading to gains in coverage by all individuals below a certain income.
However, the Supreme Court's 2012 ruling in National Federation of Independent Business v. Sebelius (NFIB) invalidated the original expansion as unconstitutionally coercive, effectively making the Medicaid expansion voluntary for states. As of this blog post, just 32 states including DC have expanded Medicaid pursuant to the ACA.
The Section 1115 Waiver Process
Most of the states that have expanded Medicaid thus far have done so through the standard procedure, following the statutory guidelines set forth by the ACA and the Centers for Medicare & Medicaid Services (CMS) and incorporating the newly eligible enrollees into their existing programs as a new beneficiary group. But some states have successfully negotiated customized expansions with CMS through the use of the Section 1115 waiver process, seeking to expand Medicaid only on their terms.
Historically, states have used the waiver process for many purposes, most notably to expand coverage to new populations or to experiment with their delivery systems. Even prior to the ACA, most states had expanded coverage to the populations traditionally eligible for Medicaid, including children and pregnant women, beyond the required income levels. Some states had even begun to expand coverage to the population of non-disabled adults that then became the focus of the ACA's expansion efforts. Other waivers were used to overhaul delivery systems, with Vermont's two waivers allowing the state to establish itself as a managed care company for purposes of administering Medicaid and to reinvest savings for broad public health purposes.
Expanding Medicaid Through Section 1115 Waivers
As of this blog post, six states have expanded their Medicaid programs under the auspices of Section 1115 waivers. Each state has customized a slightly different package of changes to the standard Medicaid expansion, and the details of each waiver are particular and complex, but many of the general changes they have sought are common across states.
To provide just a few examples: Arkansas was the first state to expand by means of a waiver, and the legality and financial prudence of its provision funneling many newly eligible enrollees onto the ACA's insurance exchanges, purchasing private coverage with Medicaid funds, has been closely examined by policymakers. Several other states have since adopted elements of this privatized model. Most of these waiver states also require many newly eligible enrollees to pay small amounts in premiums each month or meet other contribution requirements.
In Indiana, beneficiaries above the federal poverty level who do not pay these premiums can be dis-enrolled and prevented from re-enrolling for six months. Several states allow individuals to reduce these out-of-pocket contributions by participation in a host of healthy behavior incentives. CMS has not approved all requests for modifications, and the approved waivers are the result of compromise, but it has approved many.
This variability in Medicaid programs across states is not only typical, but it's specifically designed to be a feature of the program. However, this new set of waivers should give us pause. These waivers are not clearly being sought because different states have different populations or demographics in need of different benefit packages. Rather, they are being sought for other reasons: because of the political concerns at work in many of these states, rhetoric around values including personal responsibility, and the desire to minimize additional spending on Medicaid populations. Section 1115 does not obviously prohibit waivers driven by such motivations, but it does require that such demonstration projects be "likely to assist in promoting the objectives of" the Medicaid program.
Health law scholars including Sidney Watson and Nick Bagley have argued that CMS may lack the statutory or regulatory authority to approve several of these waiver provisions. My concern here is instead more general. Namely, are these waivers really "likely to assist in promoting the objectives of" the Medicaid program?
It depends on what those objectives are — and perhaps even on whether the objectives of Medicaid are the same as the objectives of the expansion. Chief Justice Roberts famously distinguished these two in his opinion in NFIB, arguing that the purpose of the original Medicaid program was to provide access to care for "the neediest among us," while the expansion transformed Medicaid into simply one "element of a comprehensive national plan to provide universal health insurance coverage."
To the extent that many of these waivers have features that are concerning from an access perspective, they may therefore seem to contravene the objectives of Medicaid in general. However, in other ways these waivers may promote the objectives of the Medicaid expansion in particular. Several of these states would not have expanded at all without these waivers, and as such their expansion of Medicaid does increase coverage for low-income individuals and may be viewed as a positive development.
The use of Medicaid funds to purchase private coverage, though fiscally costly, may also be viewed as a positive social development. To the extent that the Medicaid expansion delinks Medicaid from the set of populations traditionally referred to as the "deserving poor," encouraging Medicaid-eligible populations to enter the private market in the way that more wealthy populations already do may advance the social solidarity goals typically associated with universal health insurance coverage.
A Worrisome Development
But we might be particularly concerned about states which have already accepted the standard Medicaid expansion who now seek to obtain waivers from CMS that would restrict access or impose other conditions on their Medicaid populations.
Consider the 1115 waiver submitted by Arizona in September 2015. Arizona had already implemented the standard Medicaid expansion, but its waiver now seeks to replicate many of the same features observed in the other waiver states, including requiring monthly premiums and co-pays and including a provision like Indiana's, in which beneficiaries above the federal poverty level may be dis-enrolled and prevented from re-enrolling for six months for failure to pay premiums or co-pays.
A 2015 law passed by the legislature also requires Arizona to seek two additional requirements: First, that all able-bodied adults on Medicaid work, be actively looking for work, or attend school as a condition of eligibility. And second, that there be a five-year lifetime cap on Medicaid coverage for able-bodied adults. CMS has previously rejected similar provisions sought by other states.
As measured against the existing baseline of expansion, these requirements would restrict access to care for the newly enrolled population and would even stigmatize the newly eligible Medicaid population, more than half of which already works but is not offered health care coverage through their employer. Arizona's waiver is not "likely to assist in promoting the objectives of" the Medicaid program in terms of coverage, access, and health outcomes and should not be approved as is.
But CMS does have one key incentive to grant waivers in states that have already expanded in the traditional manner: the fear that they will walk back their expansion of Medicaid. This may not be a real fear in Arizona, where in the event that CMS denies the work requirement and lifetime cap requests, the legislature authorized the state to continue to ask for these provisions every year, seemingly hoping that a Republican administration may be more amenable to such changes.
But it was a real fear in Michigan, where a law stated that if CMS did not approve the essential features of their proposed waiver amendment, which included a host of draconian requirements around cost-sharing and premiums, the state would terminate its Medicaid expansion program and coverage for 600,000 residents. CMS approved a modified version of Michigan's waiver amendment.
But it is not so clear that most states, if any, truly have the political stomach to walk back the Medicaid expansion. Medicaid is sticky, like other government entitlements. Governors and legislators looking to eliminate the expansion would not only be taking away millions or billions of federal dollars away from their states, but would be affirmatively cancelling coverage for the tens or hundreds of thousands of residents who have already received it.
When Medicaid was first established in 1965, it took 17 years for all the states to opt in, with Arizona being the last one in 1982. Yet no state has ever eliminated the program. To be sure, it isn't impossible for a state to eliminate its expansion, but it'd be extremely difficult to do. CMS knows this, and it's likely one reason they've acceded to the demands of the states seeking relatively harsh waivers as a condition of expansion. But they should also keep it in mind as certain states seek to walk back already provided coverage.
from Health Affairs Blog http://ift.tt/1LoF3K4
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