Thorny trade-offs in Trump’s Medicaid deal

WASHINGTON >> The Trump administration has a Medicaid deal for states: more control over health care spending on certain low-income residents if they agree to a limit on how much the feds kick in.

It’s unclear how many states would be interested in such a trade-off under a complex Medicaid block grant proposal unveiled Thursday by Seema Verma, head of the Centers for Medicare and Medicaid Services. The federal share of Medicaid is now open-ended, meaning that a state is at least partly protected from unpleasant surprises like a new, $300,000 prescription drug or an economic downturn that swells enrollment.

The deal is optional for states, and they’d have to apply for a federal waiver to get it. But takers would face the prospect of court battles.

Although the Medicaid law allows for state waivers to promote experimentation, advocates for lowincome people say the administration is exceeding its legal authority because caps on federal spending would require congressional approval. Verma maintains that the plan does not cross any red lines by violating Medicaid’s spending formula.

The Trump administration is calling the proposal the Healthy Adult Opportunity. Outlined in a letter Thursday from Verma to state Medicaid directors, the deal would be restricted to able-bodied adults under 65. A state could not put nursing home residents, disabled people, pregnant women, or 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 up front 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 will be covered.

• 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.

One potential twist is whether GOP-led states that have refused the Affordable Care Act’s Medicaid expansion would be more receptive under the terms proposed by Verma. 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.

Verma said the federal government would monitor a state’s performance, acting not only as a fiscal bean counter but also to protect Medicaid recipients.

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