Alternative Paths to Medicaid Expansion
March 28, 2014
Sally Coberly, PhD & William J. Scanlon, PhD, Senior Consultant
The Patient Protection and Affordable Care Act of 2010 (ACA) authorized states' expansion of Medicaid to cover uninsured adults with incomes up to 138 percent of the federal poverty level. These expansions are financed for the first three years entirely with federal funds; states would gradually be required to pick up 10 percent of the costs in future years. States were allowed to offer a more limited set of benefits to the expansion population compared with those provided to their existing Medicaid recipients. In its June 2012 decision, however, the Supreme Court ruled that states could not be required to expand Medicaid as a condition for receiving any federal Medicaid funding, essentially making expansion optional.
Today, 23 states and the District of Columbia have expanded Medicaid as envisioned under the ACA. An additional three states—Arkansas, Iowa, and Michigan—have pursued a strategy that relies on Medicaid section 1115 waiver authority to expand coverage. A proposal from a fourth state, Pennsylvania, is under review by the Centers for Medicare & Medicaid Services (CMS).
The waiver approach has particular appeal for states where support for an expansion of their existing Medicaid program was not forthcoming. For example, a state can be explicit about the potential limited duration of its commitment, such as stating its intent to end the program if the enhanced federal matching rate is reduced. The waiver approach also gives states the ability to experiment with benefit design and other program features beyond the variation already permitted under the ACA. Examples of provisions that have been approved by CMS under the waiver expansions include: the use of premium assistance to enroll expansion populations in qualified health plans offered on the health insurance marketplaces; the imposition of premiums of up to 2 percent of income; the ability to waive premiums on the basis of successful compliance with healthy behavior incentives; and the use of a health savings-like account funded by the state and beneficiaries to pay cost sharing.
This Forum session provided an overview of how Medicaid expansion is unfolding, described in detail the waivers approved for Iowa and Michigan, and offered comments on how states are likely to proceed in the future.
Alan Weil, JD (bio)
National Academy for State Health Policy
For more information see Robin Rudowitz, Samantha Artiga, and MaryBeth Musumeci, "The ACA and Recent Section 1115 Medicaid Demonstration Waivers," The Kaiser Commission on Medicaid and the Uninsured, Issue Brief, February 2014; and Maia Crawford and Shannon M. McMahon, "Alternative Medicaid Expansion Models: Exploring State Options," Center for Health Care Strategies, Issue Brief, February 2014.
The Commonwealth Fund has a blog post on new waivers that will be updated as they develop.