How states want to shrink Medicaid
Smoking penalties, ER fees, premiums on poor on table.
Indiana hopes to make Medicaid enrollees pay a fee if they smoke cigarettes. Arizona wants to put a five-year limit on how long its poor residents can be enrolled in the program. And Kentucky wants families earning as little as $5,100 to pay Medicaid premiums — and to kick patients out of the program if their payments get 60 days behind.
These proposals are part of a host of changes that mostly conservative states have unsuccessfully sought for years to overhaul Medicaid, a federal insurance program for the poor and disabled.
Now, the Trump administration is giving at least some of these initiatives the green light. On Thursday, health officials issued new guidance to state Medicaid directors, saying the administration would allow states to impose work requirements on certain Medicaid recipients — a first in the program’s 53-year history. Doing so will help Medicaid recipients who are not disabled find employment, Seema Verma, administrator of the Centers for Medicare and Medicaid Services, said in announcing the changes.
Ten states have already filed requests for waivers to add work requirements to their Medicaid policies, and the Trump administration approved a proposal Friday from Kentucky to overhaul its Medicaid program, including by imposing new work requirement and premiums.
The states’ proposals vary widely, from small tweaks to changes that would dramatically reduce their program’s size and scope. And many plans go far beyond the new work requirements, pitching provisions that include raising premium payments for Medicaid enrollees, new fees for emergency room visits and requirements for drug testing and treatment.
States administer Medicaid, but it is a federal program. And for states to make the changes they’re suggesting, they need approval from the Trump administration.
Health-care experts say many of these proposals are likely to be adopted. The Trump administration has already told one state, Iowa, that it can sharply limit how providers are paid for treating Medicaid patients, and new premium payments for the poor are also expected to be accepted.
Other policy proposals appear outside of what the administration opened the door to on Thursday, at least for now. At least three states have proposed capping the number of years participants can be on Medicaid over the course of their lives.
President Donald Trump’s team has the authority to approve these policies, but officials said Thursday’s order on work requirements does not mean they will also begin changing other policies they have traditionally rejected.
“Yesterday’s guidance is ONLY about community engagement/work requirements and not about any other topic that might be found in a state’s” application, Johnathan Monroe, a spokesman at CMS, wrote in an email.
The Trump administration’s moves signal an attempt to align state Medicaid programs with longheld conservative policy objectives, as congressional Republicans appear to be pulling back from transforming the federal health plan through legislation after failing to repeal the Affordable Care Act.
“This is the untold story of the next chapter in the Trump administration’s assault on health policy,” said Ari Ne’eman, who served on the National Council on Disability under President Obama. “It’s a series of technocratic-sounding changes that amounts to the slow bleeding of the health-care systems for low-income Americans, but it requires no act of Congress, and, because it’s so wonkish, never gets adequate coverage.”
For years, conservative states’ proposals to restrict Medicaid were thwarted by the Obama administration, which rejected petitions to create work requirements and impose other limits. Obama expanded the number of Americans on Medicaid by millions via the Affordable Care Act, which encouraged states to expand eligibility for the program.
The health-care law funded much of the expansion, but conservatives argue the law dramatically strained states’ budgets. They also said tighter restrictions would help the poor instead find employment.
“There are people that are not going into the workplace and we have a time when the economy is very strong. This is a good time to do it,” said Robert Doar, who focuses on poverty at the conservative American Enterprise Institute.
Perhaps the most dramatic changes being sought are in Arizona, Utah and Kansas, which are seeking to create unprecedented “lifetime caps” on Medicaid. Currently, poor Americans in every state can remain on Medicaid as long as they qualify. All three states have sought to create new policies with limitations on the number of years participants could stay on Medicaid: up to five years in Arizona and Utah, and to three years in Kansas. (There would be exemptions for pregnant women, the disabled, victims of domestic abuse and others.)
It’s unclear if the Trump administration will permit lifetime caps. The Obama administration rejected similar requests, and Trump officials have given no indication they plan to approve them.
Critics slammed the proposals.
“We’d see a dramatic increase in the number of uninsured,” said Daniel Derksen, professor of public health at the University of Arizona, about how that provision would impact his state. “You’d also see the rate of closure for rural and critical access hospitals go up; those are the vulnerable parts of the health community that could only absorb a certain amount.”
Several states have also proposed creating new requirements that Medicaid participants help pay for their insurance.
For instance, the waiver Maine filed with the federal government would create new premium payments, ranging between $10 to $40 per month for Medicaid enrollees. Maine’s largest health center, Penobscot Community Health Care, has estimated that thousands of its Medicaid enrollees would be unable to meet the obligation and lose insurance, said Sarah Dubay, a spokesperson for the health center.
Although some cost-sharing already exists for Medicaid, states have proposals to strip participants of their insurance for failing to pay.
Wisconsin families who failed to meet those premiums could be ineligible for insurance for up to six months. Arkansas wants anyone who does not meet new work requirements for three months to be locked out of coverage the following year. Kentucky and Indiana want to prevent those who miss Medicaid renewal deadlines from being re-enrolled for six months unless they complete a special training course.
The Obama administration did approve limited plans in Montana and Indiana that stripped insurance for Medicaid enrollees who failed to pay, but some of the proposals go farther: They would impose fees for people at a lower income thresholds and increase penalties for missing payments.
“I think the next wave of changes we’ll see is making premiums enforceable for the very poorest people,” said Mary Beth Musumeci, associate director of the program on Medicaid and the uninsured at the Kaiser Family Foundation. “We’re talking about payments for homeless people with no income at all — it’s very difficult for them to meet.”
Other new Medicaid fees would emerge in many different states. Wisconsin is considering new monthly premiums of $8 for those under the federal poverty line. For a family of two, the federal poverty line is about $16,000 annually. Maine wants to create a new asset test for a new eligibility requirement. Utah would create a $25 fee for Medicaid patients who go to the emergency room for “nonemergency visits.” Arizona wants to stop paying for Medicaid trips to the hospital that are not emergencies.
Indiana proposes a mandatory contribution to a savings account for tobacco users on Medicaid that is the only proposal of its kind, according to Musumeci.
These new policies are intended to discourage highrisk public health behavior that come at taxpayers’ expense, but critics say they’ll simply wind up taking health insurance away from the poor.
“The Trump administration is poised to give states unprecedented room to nickel and dime low-income Medicaid beneficiaries who are struggling the most to stay afloat,” said Rebecca Vallas, a poverty policy expert at the Center for American Progress, a center-left think tank.
CAP found that upward of 640,000 Medicaid enrollees would be at risk of losing their insurance if all 10 states with pending waiver requests have them granted.
There are other changes sought by states that were already approved by the agency for Iowa. In particular, the Trump administration gave Iowa permission to limit “retroactive eligibility” for Medicaid, which ensures providers can be reimbursed by the program even if the patient was not enrolled when treated. That policy shift is expected to reduce the Medicaid benefits of roughly 40,000 Iowans, according to the Iowa Des Moines Register.
Arkansas, Indiana, and New Hampshire also received permission to limit retroactive eligibility, but only for their states’ Medicaid expansion populations. (Iowa’s waiver also impacted traditional Medicaid enrollees.) Similar changes to the one in Iowa are likely, as Verma told the Medicaid directors this fall, “If we approve an idea in one state, and another state wants to do the same thing, we will expedite those approvals.”
Beyond that, some states, including Wisconsin, are proposing new drug tests that critics say would likely force thousands more off Medicaid. It’s unclear if these will be granted.
Disability advocates worry it’s just the beginning, noting that it only makes sense for states to turn their attention to these waivers now, after the dust from the Obamacare repeal bills has settled.
“If you’re a state, putting in one of these waivers is one of the most complicated things you can do. You don’t do it when the entire health care system is up in the air,” Ne’eman said. “Now, however, the Trump administration is clearly messaging that they want conservative states to be sending in these so-called policy reforms, and moving on them as fast as possible.”
In a press call on Thursday, Verma defended moving people off Medicaid as a key desired outcome. “This policy is about helping people achieve the American Dream,” Verma told reporters. “We see people moving off Medicaid as a good outcome.”