Republican governors are working with the Trump administration to do something Congress couldn’t accomplish: fundamentally alter their state Medicaid programs.
At least six states with GOP governors— Arkansas, Kentucky, Arizona, Maine, Wisconsin and Indiana — have already drafted plans meant to introduce new rules people would have to meet to be eligible for Medicaid, which provides healthcare to low-income Americans and those with certain disabilities.
Some want to add work requirements or introduce drug testing for recipients. Others want to raise premium prices.
The Trump administration has to approve the plans. Some approvals could come in weeks.
Critics say the proposed changes will leave fewer people on Medicaid and hurt the poor and vulnerable.
“There are limits on what's allowable, and tying eligibility to work or drug testing or some of these other things is not consistent with what should be allowed,” said Judith Solomon, vice president for health policy at the liberal-leaning Centers on Budget and Policy Priorities.
“That said, we know we now have an administration that likely thinks differently, and we could see some changes in that regard,” she said.
Proponents argue the changes, which would waive federal requirements under Medicaid, are an important tool in trimming the fast-rising costs of the program.
They say Medicaid recipients should have some “skin in the game” — an incentive to transition from government support to full-time employment.
“Medicaid is Pac-Manning state budgets right now. It’s taking money away from education, transportation, in expansion and non-expansion states alike. It is eating their budgets,” said Josh Archambault, a senior fellow at the conservative Foundation for Government Accountability.
In the past, waivers have been granted to test new ways of delivering care and expanding Medicaid coverage. The only real requirements are that the waivers be budget neutral and promote the objectives of the Medicaid program.
Health and Human Services Secretary Tom Price, a former Republican congressman from Georgia and a vocal ObamaCare critic, has enormous flexibility in deciding what that means.
In March, Price and Seema Verma, who helms the Centers for Medicare and Medicaid Services, sent a letter to governors saying the administration would allow work requirements, larger premiums and other waiver provisions.
It was a dramatic departure from the Obama administration and “an open invitation” for states, said Robin Rudowitz, associate director for the Kaiser Family Foundation’s Program on Medicaid and the Uninsured.
“By and large, Obama let states use waivers to expand the number of people in the Medicaid program,” Archambault said.
The Trump administration seems poised to do the opposite.
Critics say the proposed requirements go beyond the authority of the executive branch, but Archambault said the statute on what’s allowed is extremely broad, meaning the administration has the authority to approve most, if not all of the proposals.
Republicans in Congress have been deeply divided over Medicaid, with conservatives seeking to cut spending on the program but centrists from states where it was expanded under ObamaCare pushing back.
The House and Senate’s ObamaCare repeal bills sought to drastically cut back Medicaid spending by capping federal financing and ending ObamaCare’s enhanced federal funding for coverage expansion. The bills also would have given states the option of imposing work requirements.
Medicaid waivers can’t change the program’s financing the way a federal law could, but several state waivers filed months ago include a work requirement as a way to trim spending.
Work requirements “will have the result of cutting state Medicaid costs because fewer people will be on Medicaid,” said Deborah Bachrach, a partner at Manatt Health and former Medicaid director of New York.
To date, no state has received an approval for a waiver requiring people to work to be eligible for Medicaid. If the Trump administration approves of one, most experts think other states will get similar requirements approved quickly.
“If and when Kentucky and Arizona get approval ... you’ll see a bunch of other Republican states copycat,” Archambault said.
Other changes, if approved, include lowering the eligibility levels for coverage and a time limit for being on Medicaid.
Arkansas recently filed a waiver request to lower the Medicaid eligibility level while still receiving extra federal money as a Medicaid expansion state. It’s the first state to make such a request of the Trump administration; some states tried similar requests during the Obama administration and were denied.
Wisconsin would like to screen all and test some applicants for drugs. Those who test positive for drugs would be required to receive treatment; those who refuse to be screened or take a test would be ineligible for Medicaid benefits.
The state also wants to impose a 48-month limit on Medicaid eligibility, unless the person is working.
“My biggest concern is that the state is going to create a lot of new red tape and expense that is going to suppress Medicaid participation and increase total healthcare costs by putting greater reliance on hospital and emergency departments,” Jon Peacock, research director for Wisconsin-based Kids Forward, said.
Experts warn certain controversial provisions, if implemented, could be targets for lawsuits.
“Some of these waivers are pushing the boundaries of what has been approved before, and that could lead to potential litigation,” Rudowitz said.