State Medicaid Waiver Proposals Threaten Health Coverage

By Lena O’Rourke

While U.S. senators continue to work behind closed doors to develop their health care proposal, some states are barreling ahead with plans to make sweeping Medicaid changes through the federal waiver process. In the past, such restrictive and sweeping proposals have been rejected by the federal Centers for Medicare and Medicaid Services (CMS) as inconsistent with the fundamental goal of the Medicaid program—to provide health insurance and medical assistance to people who don’t have the incomes and resources necessary to meet the costs of care. However, on her first day in office, CMS Administrator Seema Verma indicated an intent to approve waivers that go far beyond what was previously allowed.

Section 1115 of the Social Security Act gives the authority to waive certain requirements of the Medicaid law to allow states to test experimental pilots or demonstrations that advance the intent of the Medicaid program. States have used waivers to test many kinds of policies, such as expanding coverage, implementing new delivery systems (e.g., managed care) and extending coverage quickly during an emergency. Waivers are not designed to make wholesale changes to a state’s Medicaid program, to fundamentally alter the intent of Medicaid, or to impose a political agenda on low-income people. However, several states have begun the waiver process with the intent to do all of this. If approved by CMS, these waiver proposals would have a profound and negative impact on the people who rely on Medicaid in these states.

Four states—Wisconsin, Maine, Indiana, and Arkansas—have released such waiver proposals in recent months; Wisconsin’s has already been submitted to CMS for approval. Across these waivers, there are new proposals and provisions that have never been approved in any other state, and others that have never been approved for traditional (non-expansion) Medicaid populations. The waivers propose time limits on Medicaid receipt, drug testing requirements, and the introduction of premiums for people with incomes below the federal poverty level. As CLASP explained in our comments on the Maine and Wisconsin waivers, if implemented, these will result in people losing needed coverage, worse health outcomes, and higher administrative costs.

Time limits on Medicaid Eligibility and Work Requirements

All four waiver proposals make receipt of Medicaid contingent on work or participation in a work program. Wisconsin, Maine, and Indiana all include time limits on coverage when recipients are not working or participating in a work program. Arkansas would “lock-out” recipients from health coverage until the next year for failure to meet work requirements—even if they later got a job. These provisions are inconsistent with the goals of Medicaid because they would act as a barrier to health insurance, particularly for those with chronic conditions and disabilities, as well as those in areas of high unemployment or who work the variable and unpredictable hours characteristic of many low-wage jobs. In addition, while the purported goal of this provision is to promote work, the reality is that denying access to health care makes it less likely that people will be healthy enough to work. This provision would also increase administrative costs of the Medicaid program and reduce the use of preventative and early treatment services, ultimately driving up the costs of care while also leading to worse health outcomes.

Drug testing

Wisconsin proposes to condition Medicaid eligibility on a drug screening assessment and, if indicated, a drug test. Those who test positive would be required to participate in treatment. The proposed policy is grounded in stereotype rather than evidence. It would be stigmatizing, costly, and burdensome for the applicant, for medical providers, and for the state. Moreover, this policy would be ineffective at the goal of connecting people in need of substance abuse treatment with appropriate services.

Monthly Premiums

Both Wisconsin and Maine would impose new premiums on even the lowest-income individuals and institute coverage lock-out periods for non-payment of premiums. A large body of research shows that even modest premiums keep people from enrolling in coverage. People may be unable to afford to make the payments, particularly during periods of unemployment or other financial hardship. Low-income consumers have very little disposable income and often must make choices and stretch limited funds across many critical purchases. While Medicaid is designed to protect people with limited resources, this proposal adds another cost to their monthly budget.

Before a state can submit a waiver, it must have a public comment period. The state-level public comment periods in both Maine and Wisconsin are closed. Arkansas’s comments are due June 18, and Indiana’s comments are due June 23.

After the public comment period, states may revise their proposals before submitting to CMS, which must also consider public comments before granting the waivers. Wisconsin just submitted its proposal to CMS—and the federal public comment period should open soon. CLASP will work with our advocacy partners to highlight any proposed waivers that would weaken protections for the low-income people covered through Medicaid and to submit comments.

Those of us concerned about low-income people must be vigilant and involved. Governors and legislators in other states have expressed interest in similar proposals, and waivers may be proposed in state budgets or legislation. While it is important to submit comments, the best chance of stopping these waivers is before they are formally proposed. It is important to educate policymakers, lawmakers, health care providers, and the general public about who will be affected and how the changes in state policy will be harmful. Decision makers and advocates must speak out to protect care for low-income and vulnerable populations.