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Red States Seek Do-Overs on Medicaid Expansion

By Marissa Evans, CQ Roll Call

July 7, 2016 -- Several Republican-controlled states are appealing to the Obama administration for permission to revise planned expansions of their Medicaid programs—a long-shot bid at a time when officials are typically turning down such requests.

Arkansas, Kentucky, and Ohio are preparing for negotiations in the coming months with the Centers for Medicare and Medicaid Services on the terms of program expansions that allowed them to expand program eligibility to thousands of residents. Medicaid is the federal-state health program for the poor and disabled; states administer the programs and determine eligibility in consultation with program administrators, who can grant waivers.

Republican Kentucky Gov. Matt Bevin's administration wrapped up a set of public hearings on Wednesday on a request to revamp how the state offers coverage for 400,000 low-income residents. Bevin for months has tried to put a conservative spin on the widely praised program he inherited from Democrat Steve Beshear and still avoid political backlash from scaling back eligibility for thousands of Kentuckians.

Bevin's waiver proposal calls for giving recipients health savings accounts, imposing work requirements and offering dental and vision care for those who practice healthy habits and improved access to substance abuse and mental health treatment. He also would deny benefits for six months to those beneficiaries who don't pay their health bills or file eligibility determination paperwork on time.

Though the Bevin administration knows the Obama administration will likely not approve the work requirements or the lock-out periods, it is forging ahead. Bevin said in a press conference on June 22 that he would dismantle Kentucky's expansion altogether if the waiver negotiations don't go well.

That prospect could increase the rolls of the uninsured and deny health providers a revenue stream, said Matt Salo, executive director for the National Association of Medicaid Directors, in an interview. It is a dilemma that the Obama administration is hoping to use to keep the state on its original course.

"The administration now has all of the leverage," Salo said. "The only thing the state can do if it is unhappy with the deal they got is to drop [expansion] and pull out of the entire thing and the administration is relatively confident that that is not going to happen."

Under the 2010 federal health law states can expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level. By 2020, states will have to cover 10 percent of the cost. Thirty-one states and the District of Columbia have taken up the offer.

States are backtracking on their original Medicaid waivers in the wake of Indiana and Arkansas taking their expansions beyond the scope of what the health law required. Indiana is a particular inspiration for conservative lawmakers. Under Republican Gov. Mike Pence, the state secured federal approval to charge premiums to beneficiaries and deny re-enrollment if the individuals do not pay.

Arkansas' redone Medicaid waiver, prompted by GOP Gov. Asa Hutchinson's efforts to control costs, would create a voluntary work and job training referral system for unemployed beneficiaries and require those with jobs to enroll in employer-sponsored plans. However, the program would not provide coverage for services provided up to 90 days prior to enrollment. Meanwhile, in Ohio, the administration of Republican Gov. John Kasich submitted its own waiver proposal on June 30 that would create health savings accounts for beneficiaries, provide a voluntary work referral program and a point system to give an incentive for healthy habits.

Cost-Sharing Pressure

Charles Hughes, a research associate with the libertarian Cato Institute, said in an interview that the requirement that expansion states cover 5 percent of the share of expansion costs in 2017 is driving efforts to retool the program.

Hughes said some states are seeing a "woodwork effect," with thousands of new beneficiaries signing up. 

"At the same time, they are trying to figure out a way to incentivize people to transition out of those programs to something like an employer-sponsored insurance plan or individual market plan," he said.

The requests have a political element in an election year but could also be part of a broader strategy to pressure federal officials to make accommodations, said Adam Searing, an associate professor of practice for the Georgetown University Center for Children and Families, in an interview. Threatening to end Medicaid expansion would be a last ditch effort to force concessions or blame coverage losses on an intractable administration.

"There is clearly some conservative ideology at work," Searing said. "With them saying 'we would like to have the Medicaid program look like private insurance' or 'we would like people to have more skin in the game' or 'be more responsible for their care' I think it is deemed rationale for these waivers but I do not know if [Republicans] go very far in doing that."

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