Brooks Blog

Sunday • April 22, 2018

The Polarization of Medicaid

Medicaid policy debates generally falls under familiar partisan lines: conservative Republicans argue that broad eligibility promotes a weak work ethic (aka laziness) while Democrats argue that narrow eligibility does not meet the needs of society’s most vulnerable. Opponents will complain about costs while proponents will tout the program’s successes.

With different states led by different parties and standing to gain from different policies, these tendencies are creating a polarization of Medicaid, something exemplified by the current efforts to expand Medicaid in some states while other states add more requirements to reduce eligibility.

What is Medicaid?

Medicaid began just over 50 years ago as a program for those on cash assistance programs to be able to get access to healthcare, according to its governing body, CMS. It then started filling other coverage gaps as well: the disabled, low-income families, pregnant women and those needing long-term care all became eligible over time.

According to a recent AHIP report, Medicaid is the nation’s largest insurer, covering over 74 million Americans, of which over 52 million are covered through private health plans. It covers nearly half of all births in the country, 75% of poor children, and two-thirds of all nursing home residents. The Government Accountability Office “estimated Medicaid outlays for fiscal year 2016 were $575.9 billion, of which $363.4 billion was financed by the federal government and $212.5 billion by the states.” Meanwhile, pharmaceutical manufacturers paid over $30 billion in 2016 through rebates to the Medicaid program, according to PhRMA. Although it varies between states, all states offer some form of prescription drug coverage.

The variance of programs in 50 states is made more diverse by what are called Section 1115 Medicaid Waivers which allow each state to apply for waivers from federal standards to test demonstration models. The tests come in the form of a few key categories including work requirements and other eligibility and enrollment constraints.

Work Requirements

Work requirements are in the news due to President Trump’s executive order last week requiring that federal assistance programs such as Medicaid include work as an eligibility requirement. But even before that, the requirement that able-bodied adults work in order to be eligible was included in three states’ Section 1115 Medicaid Demonstration Waivers.

Kentucky’s federal approval in January–the first state to receive a federal waiver for a program involving work requirements–led health advocacy organizations to sue the Department of Health and Human Services (which oversees the Centers for Medicare and Medicaid Services, CMS) on the basis that demonstration waivers should not reduce eligibility. If the courts side with the plaintiffs, the lawsuit may not just prevent the state program from taking effect on schedule in July but stop other states pursuing similar waivers as well.

Thus far those states are Indiana and Arkansas: Indiana passed similar requirements in February, and Arkansas received approval for work requirements in March. Decisions on several other state waivers are pending.

Expansion

On the other end of the access spectrum, one of the simultaneous trends is that more states–whether through lawmakers or citizen groups–are working to expand Medicaid to include low income adults based on different thresholds of the federal poverty level.

The Virginia House is close to making Virginia the 33rd state to expand Medicaid. Maine voters petitioned for and passed a first-of-its-kind expansion last November; Utah legislators signed an expansion bill last month that awaits federal approval, and an Idaho group is near its goal for signatures to use the November ballot to expand Medicaid.

Disproportionate Share Hospital Providers

Meanwhile increased federal oversight of both Medicaid and of the 340B Drug Discount Program could lead to changes in the definition and compensation models of disproportionate share hospital providers (DSHs).

An Uphill Battle

The Trump Administration and Republican Congress are concerned about fraud, waste and abuse but struggling regarding oversight as they also attempt to further relinquish federal control of the program, making it more diverse and harder to regulate. Meanwhile, the attempt to curtail programs designed to support low income people will continue to face intense public scrutiny as demonstrated by this Kaiser Family Foundation recent survey — a survey that also found the ACA having its highest approval rating today since inception, largely (you guessed it) along party lines.

Whether work ethic or population health is important to you, one thing is certain: the same polarization seen in political debate is showing effects in programs including Medicaid. All this leads to the growing state-by-state polarization of quality and access to care, a trend reflected in this recent JAMA report showing huge variation in health outcomes based on state of residence.

The take home? Expect any changes to come to the program in fits and starts marked by legal battles rather than compromise.

 

 

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