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Iowa Second State to Expand Medicaid Via Exchange Coverage

By Rebecca Adams, CQ HealthBeat Associate Editor

December 10, 2013 -- The Centers for Medicare and Medicaid Services (CMS) approved a Medicaid expansion waiver requests by the state of Iowa last week. CMS officials made few changes to the state's plan, although they will not let the state charge monthly premiums to very low-income people.

The approval shows how eager federal officials are to encourage states to expand the program for low-income Americans under the health law (PL 111-148, PL 111-152).

The Iowa plan is similar to one for Arkansas that CMS officials approved in September. Both states will use Medicaid dollars to buy coverage offered through the new marketplaces.

In Iowa, the state will buy marketplace insurance plans for people with income between 100 and 138 percent of the federal poverty line who are between the ages of 19 and 64.

The approvals for Arkansas and now Iowa could encourage officials in other states to consider offering benefits in the same way.

In both states, people in the new population with income at or below 100 percent of the federal poverty line and medically frail people will receive coverage under the traditional Medicaid program. This helps ensure that a few high-cost people will not drive up costs for other people in the marketplaces and allows vulnerable people to use a system that is more familiar to them, officials said.

In 2013, the federal poverty line is $11,490 for a single person.

In Iowa, state officials will be allowed by CMS officials to charge a monthly premium to people with income above the federal poverty line. Some consumer advocates worry that could discourage people from enrolling.

Federal officials did not approve Iowa's request to charge premiums to people with incomes between 50 and 100 percent of the federal poverty line. An administration official said that CMS does not believe requiring the payment of premiums at income levels that low without safeguards will further the objectives of the Medicaid program, which is the legal standard for granting state demonstration requests.

About 40 states charge premiums to some Medicaid enrollees, but no state charges premiums to people with income below the poverty line.

Iowa officials also will be allowed to create an incentive program to encourage people who are gaining coverage through the Medicaid expansion to adopt healthy behavior. The state also will be permitted to test payment ideas that promote care coordination, lower costs, and higher-quality care.

"Iowa has pioneered innovative, state-based solutions for Medicaid expansion, and we are pleased to grant this waiver," said CMS Administrator Marilyn Tavenner. "CMS stands ready to work with other states to explore options that aim to improve care and lower costs in the Medicaid program."

The Iowa waivers will extend Medicaid coverage to more than 100,000 additional Iowans, said administration officials.

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