Two Approaches to Medicaid

By Jennifer Dexter, Director, Policy

Medicaid is a jointly funded state and federal government health insurance program for an estimated 65.5 million people in the United States. Coverage through Medicaid is for eligible low-income adults, pregnant women, elderly adults, children, and those with disabilities. In addition, the Affordable Care Act allows states to expand Medicaid for adults with incomes up to 138 percent of the federal poverty level (FPL). To date, more than half of U.S. states have opted to expand. The states are responsible for administering Medicaid, but they must do so within federal requirements.

Fiscal pressures on the states, as well as the encouragement and openness of the Centers of Medicare and Medicaid Services (CMS), have resulted in the states utilizing Medicaid waivers to explore new methods of administering Medicaid, as well as new limits on eligibility and enrollment. Several states have sent in proposals that have either been approved or are pending decisions by CMS.

Work Requirements

As of October 9, 2019, 18 states have either submitted or been approved for Medicaid waivers that include work requirements for a percentage of the Medicaid population. While work requirements vary amongst the states, they generally require Medicaid enrollees to work approximately 20 hours per week, or 80 hours per month, to receive coverage.

However, these waivers exempt children under 18, elderly adults, pregnant women, severely disabled individuals, the medically frail, and other specific populations from obliging with these work requirements. In their limited implementation, work requirements have shown to significantly decrease the number of people enrolled in Medicaid.

All the states who implemented their approved waivers have either decided to stop implementing them, such as Arizona and Indiana, or the courts have set them aside. Several states that have approved waivers have opted to implement them.

On November 4, 2019, the Governor of Georgia, Brian Kemp, announced a proposed Medicaid expansion that was contingent on a work requirement. This proposal will be the latest test of the viability of work requirements.

Tennessee Block Grant Proposal

On September 17, 2019, Tennessee unveiled its first-in-the-nation proposal to cap federal funding for its Medicaid program and phase out the open-ended entitlement in exchange for new flexibility. Under the plan, the amount of federal money Tennessee receives for their Medicaid program will be calculated based on average enrollment from the last three years. For any year in which enrollment grows beyond that average, federal funding would increase on a per-person basis. While there are significant safeguards for the state, this model is projected to have a limiting effect on access to Medicaid services.

In exchange for capped financing, the state is requesting the ability to limit which prescription drugs are covered and modify rules related to uncompensated care payments to hospitals. Uncompensated care costs would be excluded from the state’s lump-sum payment, as would costs for outpatient pharmacy services. The state would also keep half of any savings if it spends less than its annual allotment.

The overhaul still requires administration approval, and the state is accepting public comment and holding listening sessions. Reports from the listening sessions illustrate almost a unanimous opposition from stakeholders.