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Medicaid Won’t Look the Same Next Year

From expansions to work mandates, states seek sweeping changes in 2018

Some states want to expand Medicaid, others want to add a work mandate, and Virginia is trying to do both. This year may define the 50-year-old program. (Bill Clark/CQ Roll Call file photo)
Some states want to expand Medicaid, others want to add a work mandate, and Virginia is trying to do both. This year may define the 50-year-old program. (Bill Clark/CQ Roll Call file photo)

This year could mark a significant shift for Medicaid programs across the country, as some states look to expand the government insurance program to more poor Americans while others seek to add more requirements for people who benefit.

Initiatives to get Medicaid expansion put on the November ballot are underway in Utah, Nebraska, Idaho and Montana. And Virginia lawmakers appear on the verge of securing an expansion deal, after years of rejecting the idea.

Meanwhile, Indiana, Kentucky and Arkansas are poised to make precedent-setting changes to their programs in the coming months, such as adding work requirements, while other states await word from the Trump administration on whether they can make other revisions.

State actions on the issue came to a halt in the aftermath of the 2016 election, said Ben Sommers, an associate professor of health policy and economics at Harvard University. Congress spent last year trying to repeal the 2010 health care law, and it wasn’t clear initially what would happen to Medicaid funding, Sommers said.

Now, efforts to repeal the law seem to be done, at least for this year, he said. “That’s giving states renewed confidence that [expansion] is at least worth looking at.”

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Getting on the ballot

This month, consumer advocates in Utah announced they won enough signatures to create a November ballot measure that would expand Medicaid to more than 150,000 adults if approved by voters. Similar signature gathering is underway in Nebraska, Idaho and Montana.

The expansions would extend coverage to an estimated 300,000 people in three of the states. And in Montana, such a measure would reauthorize the state’s existing expansion, which covers nearly 100,000 people and is slated to end next year, according to The Fairness Project, a national advocacy group supporting the state expansion campaigns.

Expansion advocates must file signatures by April 30 in Idaho, June 22 in Montana and July 6 in Nebraska to get on the November ballot.

The outlook for Utah’s referendum is positive, with polls showing a majority of voters approve of the idea, and enthusiasm is similar in the other states, said Jonathan Schleifer, Fairness Project executive director.

So far, 32 states and the District of Columbia have opted to expand Medicaid under the health law; 18 states have not.

There are two approaches to Medicaid, with the first led by politicians whose motivations are mostly ideological, Schleifer said. “The other approach is being led by voters … who either themselves are going to benefit from expansion or their neighbors will,” he said. “They are not ideological.”

But even a resounding vote of approval in November wouldn’t necessarily mean a smooth path to expansion for those states.

That’s become clear in Maine, the first state to approve expansion through a ballot measure, with 60 percent of voters supporting it last November.

Republican Gov. Paul LePage refused to move forward, saying state lawmakers must first find a way to fund it and meet requirements he set out, such as not using a one-time funding source. Meanwhile, an estimated 70,000 Mainers are supposed to become eligible for Medicaid starting in July. Advocates in the state warn they will pursue legal action if the governor won’t act.

Schleifer noted that the ballot referendum proposals in Utah and Montana don’t leave the funding question to lawmakers. Instead, Utah’s proposed measure calls for a slight sales tax increase and Montana’s would raise the tax on cigarettes.

“People want to own the decision-making process itself, even if that means a couple cents in sales tax,” he said. “That’s something they’re open to.”

Making them work

While some states are exploring expanding Medicaid this year, others are pursuing changes that could lead to hundreds of thousands of people getting kicked off the program.

The push for Medicaid work requirements alone could affect 1.7 million Americans in the 10 states that have so far sought federal approval for the idea, according to a recent report by accounting and consulting firm PwC. That population represents an estimated $8 billion in yearly Medicaid costs, the report shows.

Work requirement proponents tout the idea as a way to help lift people out of poverty and improve their health. But critics argue that most Medicaid recipients who can work already do and that a work mandate will lead to a bureaucratic nightmare, with vulnerable groups, such as people with disabilities, unfairly losing their health coverage.

The Trump administration already approved work requirements in Kentucky, Indiana and Arkansas. Other states, such as Alabama, Ohio and Virginia, have expressed interest in creating such a mandate.

“States are always in the best position to think about what’s going to work best in their state,” Centers for Medicare and Medicaid Services chief Seema Verma said in March, while announcing federal approval for work requirements in Arkansas. “They’re closer to the people that they serve, and they understand what’s needed in their communities.”

Consumer advocates filed a class-action lawsuit in the Kentucky case, alleging the administration does not have the authority to approve sweeping changes to Medicaid that they argue don’t meet the program’s objectives. A federal judge set a hearing for June 13.

Meanwhile, some states are seeking other fundamental Medicaid changes, such as lifetime limits and curbing the prescription drugs they’ll cover.

States are seeking such program shifts using what are known as 1115 waivers, which allow them to experiment with different ways of operating Medicaid not usually permitted by federal law.

Half measures

The outlook for Medicaid expansion and state waivers is murky.

In addition to the states pursuing expansion ballot measures, Virginia legislators appear poised to expand after years of rejecting it under former Democratic Gov. Terry McAuliffe. The state’s GOP-controlled House of Delegates voted last Tuesday night to expand Medicaid with a work requirement. But it’s not clear whether the work mandate will be enough to garner sufficient support in the state Senate.

Meanwhile, Massachusetts and Arkansas have asked for federal permission to limit Medicaid expansion to people with incomes up to 100 percent of the poverty level, about $12,100 for an individual in 2018. But the health law requires states to expand up to 138 percent, so those states would need permission from federal officials to do so.

Utah also recently passed a law seeking to expand its Medicaid program to people earning less than 95 percent of the poverty level.

It’s unclear how the Trump administration will land on the partial expansion issue, which presents a dilemma with competing influences.

If it were to allow states to roll back their expansions to cover fewer people, many of those individuals would become eligible for subsidies to purchase coverage on the health law’s exchanges. That could end up being more costly for the federal government, since the subsidies are totally federally funded while states pick up at least part of the expense of covering people in Medicaid.

The administration has so far punted on the partial expansion question. It approved Arkansas’ work requirement proposal but said it was still considering the limited expansion idea.

“The president clearly does not like the Affordable Care Act and is reluctant to do anything that expands its reach,” said Harvard’s Sommers. “The big question is does this administration want more people in Medicaid or more people covered by the Affordable Care Act?”

The partial expansion idea presents legal, policy and fiscal questions, said Patricia Boozang with Manatt, a consulting firm with health care expertise.

How would the administration weigh the higher cost of subsidies versus Medicaid eligibility? Boozang asked. Would it allow states to roll back their expansions but still get the higher federal funding rate for their expansion populations?

“Does CMS support the notion of allowing new ACA expansions?” she said. “Does the White House?”

Sommers also noted that federal approvals for work requirements are not a foregone conclusion if they are coupled with expansions.

“In some cases, there’s a bit of a conflict,” he said. “It’s not at all clear to me that all of these waivers are going to go through.”

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