Medicaid offer to states draws praise, criticism

Hutchinson welcomes U.S. block-grant funding option

WASHINGTON — President Donald Trump’s administration Thursday offered states more control over Medicaid spending for some of their poorest residents, but first governors must accept a limit on how much the federal government kicks in.

Republican governors in Oklahoma and Arkansas welcomed the offer.

In a statement, Arkansas Gov. Asa Hutchinson called the federal announcement “good news for everyone who believes the states should have more flexibility in managing one of the most expensive items in a state’s budget and managing the delivery of health care services to the most vulnerable citizens.”

The Republican governor said he would immediately begin to review the administration’s guidance “to see how this would fit into an Arkansas-type approach for providing health care to the expanded Medicaid population.”

Under the so-called private option, Arkansas expanded Medicaid coverage

through a federal waiver allowing it to use Medicaid funds to buy private coverage available through the federal healthcare.gov website for the newly eligible recipients.

Legislation passed by the state’s Republican-controlled Legislature during a special session in 2016 revamped that part of the Medicaid program, named it Arkansas Works and directed Hutchinson to request block-grant funding for the Medicaid program “as soon as practical if the federal law or regulations change to allow” such a model.

“The block-grant authority is something that we’ve asked for, and I applaud CMS Administrator Seema Verma and Health and Human Services Secretary Alex Azar for leaning forward to recognize that the states can manage these types of health care programs in an effective way,” Hutchinson said.

Verma, head of the Centers for Medicaid and Medicaid Services, said the idea behind the administration’s “Healthy Adult Opportunity” is to improve the quality of care for the poor while controlling costs. Officials portrayed it as a “groundbreaking opportunity” for states to upgrade care, limit the program’s strain on their budgets, and gain more freedom to shape Medicaid to local needs.

But the American Medical Association and a professional society representing cancer doctors warned against limits on Medicaid financing, and advocates for low-income people said the administration wants to weaken the social safety net.

“This nefarious program is just a Medicaid block grant by another name, and the only opportunity it will provide is to miss out on needed care or go broke trying to get it,” said Eagan Kemp, health policy advocate for Public Citizen, one of many pro-consumer and health care groups that issued sharp denunciations. Opponents include a coalition of 27 patient-advocacy organizations, the AARP and major health care lobbies.

On Capitol Hill, Democrats criticized the announcement.

“Even after people across the country spoke out and pressed Congress to reject President Trump’s plan to gut Medicaid … he’s still charging forward with harmful policies that will hurt the many families who rely on Medicaid,” wrote Sen. Patty Murray of Washington, the ranking Democrat on the Senate Health, Education, Labor and Pensions Committee.

Democrats portrayed the change as new evidence of the president’s determination to undermine the Patient Protection and Affordable Care Act. “After being stopped in the Congress from repealing the health care law and destroying the lifeline of Medicaid, the Trump administration has decided to ignore the law and steal lifesaving health care from seniors and families anyway,” House Speaker Nancy Pelosi of California said in a statement.

As unveiled by Verma, the block-grant proposal would be a first step to changing a long-standing financial arrangement between Washington and the states. The federal share of Medicaid is now open-ended, meaning that a state is at least partly protected from surprises like an economic downturn that swells enrollment.

Outlined in a letter from Verma to state Medicaid directors, the deal is optional for states. To get it, they’d have to apply for a federal waiver.

Its scope would be restricted to coverage for able-bodied adults under 65. A state could not put nursing home residents, disabled people, or very low-income pregnant women and children into the new plan. The federal government would not limit its Medicaid contribution for these groups, considered the most sensitive.

“Our focus … is to change the whole paradigm and to reset the framework of how we’re working with states,” said Verma. “We are providing them this upfront flexibility and the federal government is in the role of monitoring the program.”

In exchange for operating under a fixed federal allocation, states, among other things, would be able to:

■ Limit what prescription drugs and benefits will be covered, within certain guidelines.

■ Waive a current Medicaid benefit that allows a low-income person to get retroactive coverage for medical care going back three months.

■ Use copays to steer Medicaid recipients to services that are deemed to have the highest value.

■ Share in savings with the federal government, under certain conditions.

■ Require Medicaid recipients to work, get schooling and training, or volunteer in their communities.

One potential twist is whether states that have refused the Affordable Care Act’s Medicaid expansion would be more receptive under the terms proposed by the administration. For example, Oklahoma voters will get to decide on a Medicaid expansion ballot initiative this year, and Republican Gov. Kevin Stitt has expressed interest

in a block grant as part of an alternative approach.

Stitt spoke at the formal presentation of the Trump administration’s plan, calling it a “game-changer” and saying his administration will get to work immediately on its proposal.

Verma said the plan could raise the bar on medical care for the poor. States would have to agree to report a series of health indicators as a condition of participating.

“If a state set up something that was onerous … that would be an impetus for the federal government to take action,” she said.

Medicaid is a $600 billion federal-state program that covers about 70 million low-income people, from elderly nursing home residents to many newborns. Former President Barack Obama’s health care law gave states the option of expanding it. Most states have done so, covering millions more able-bodied adults. Polls show the program has widespread public support.

Early on as a presidential candidate Trump promised to protect Medicaid. “Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid,” he said at a 2015 event in New Hampshire. “And we can’t do that.”

Trump’s budgets have continued to call for broad limits on the federal share of Medicaid.

Sen. Ron Wyden of Oregon, the ranking Democrat on the committee that oversees Medicaid, said naming the program the Healthy Adult Opportunity “should be highlighted as a triumph of Orwellian branding.”

“This approach is a gross distortion of the Medicaid program and in defiance of congressional intent,” Wyden said in a statement.

Verma said the Medicaid law allows for state waivers to promote experimentation, and the plan does not cross any red lines set by Congress.

Cindy Mann, who ran Medicaid in the Obama administration, said that’s likely to be questioned. “It is virtually certain that any state that takes up the option will be walking into litigation,” said Mann, now with the Manatt Health consultancy.

As unveiled by Verma, the block-grant proposal would be a first step to changing a long-standing financial arrangement between Washington and the states.