Medicaid Expansion Comes With Strings In GOP States

aaM Photography, Ltd./

A handful of red states have embraced Obamacare by expanding Medicaid. But they have done so on their own terms, getting waivers from the federal government to tweak the program.

Democrats often oppose some of the changes made in those states, like charging monthly premiums, on the grounds that they could deter low-income people from participating. Some health economists agree. But it still remains to be seen whether premiums will have a substantial impact on expansion in those states.

“It’s too soon to tell since these states are on a slower implementation path and differ from the other states on many dimensions,” Sharon K. Long, a health policy expert at the Urban Institute, said in an email. “There are a number of studies underway that will be looking at this.”

Twenty-four of the 30 states that expanded Medicaid have done so according to the requirements of the Affordable Care Act. But Arkansas, Indiana, Iowa, Michigan, Pennsylvania and Montana have had waivers approved by the Obama administration to expand their Medicaid programs. The Medicaid waivers, which existed before the Affordable Care Act, allow states to test modifications to their programs for a trial period. The waivers must be approved by the federal government.

In the past, the waivers have proven useful for improving Medicaid programs, says Katherine Baicker, a professor of health economics at Harvard University.

“There is a real advantage to states being able to experiment with different types of insurance policies and different mechanisms for delivering care more effectively,” Baicker said Thursday in an interview. “We’ve learned a lot from Medicaid waivers about what works well and what doesn’t work well.”

It is generally accepted among health economists that charging premiums deters some people from enrolling for health insurance.

“There is a fairly robust body of research that shows that for low-income people, premiums do depress participation,” Judy Solomon, vice president for health policy at the Center on Budget and Policy Priorities, said Thursday in an interview.

One study, published last year in the Journal of Health Economics, found that charging $10 monthly premiums was associated with enrollment dropping 12 percentage points in Wisconsin’s Medicaid program.

But Gail Wilensky, a health economist and senior fellow at Project HOPE, said the premiums could play an important role in funding Medicaid programs.

“There are limited public resources to go around and you can imagine that if you have some premiums for people with the means to potentially pay it you’ll cover more people overall,” Wilensky said in an interview Thursday.

The Obama administration has set conditions for the waivers. For states to receive federal funding for expansion they must expand coverage to people who earn less than 138 percent of the federal poverty line, as required under the Affordable Care Act. The administration has refused to approve waivers that include work requirements for Medicaid coverage. The White House also denied separate proposals by Arkansas, Iowa and Indiana that would have allowed them to drop Medicaid coverage for beneficiaries who make below the federal poverty line if they do not pay their premiums.

“The degree to which CMS has granted these additional flexibilities varies a little by state, but by and large they have been fairly prescriptive and limited,” Robin Rudowitz, a Medicaid expert at the Kaiser Family Foundation, said in an interview.

“All of these waivers always have a lot of negotiations back and forth with CMS.”

Despite the careful negotiations on behalf of CMS, some Obamacare supporters say the waivers might not be in the best interest of low-income Americans.

Dee Mahan, Medicaid program director for the liberal advocacy group Families USA, says the premiums make it more difficult for low-income people to maintain health coverage.

“Very low income people have to make tough decisions between rent, child care, food,” Mahan said. “If they miss a premium they could be dis-enrolled.”

But others say the deals are worth it compared to the alternative.

“We have to remember what the options are and what the purpose of the program is,” Wilensky said Thursday in an interview. “Once the Supreme Court ruled that threatening all Medicaid if they didn’t expand was not legal that you had a department that needs to encourage reluctant states to expand Medicaid.”

Morning Consult