Thousands Lose Medicaid as Arkansas Implements First 1115 Work Requirement Waiver

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Source: access.arkansas.gov via Bloomberg News

It’s 7am and I’m sitting in bed with too many beverages (coffee, water, smoothie–gotta get those leafy greens in) and too many tabs open (embryology review, TeamRads, Twitter, and multiple newspaper homepages). And oh yeah, my second anatomy exam is this afternoon.

But what I’m actually stressing about how thousands of low-income Arkansas residents no longer have Medicaid coverage. 

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Medicaid Work Requirements Could Impose Burden on Working Poor

On June 29, 2018, the D.C. federal district court issued a ruling in Stewart v. Azar, a lawsuit brought by a group of Kentucky Medicaid beneficiaries challenging the Secretary of HHS’s approval of a Section 1115 Medicaid waiver that imposes work requirements, monthly premiums up to 4% of income, coverage lockouts, and other provisions on Kentucky’s Medicaid program that could lead to a loss of coverage for 95,000 enrollees. The judge ruled that HHS Secretary Azar violated the Administrative Procedures Act (APA) in approving the waiver by not adequately evaluating whether the requirement that beneficiaries log 80 hours a month of “work and community engagement” furthers the objectives of Medicaid.

In early 2017, CMS Administrator Seema Verma and former HHS Secretary Tom Price sent a letter to governors promoting more flexibility in the design of state Medicaid programs with 1115 waivers to refocus the program on the “truly vulnerable.” Republicans argue that social service programs, such as Medicaid, disincentivize work and favor imposing work requirements as a condition of receiving benefits. The Obama Administration did not allow states to pursue work requirements, which are predicted to make it a serious challenge for low-income individuals and families to retain Medicaid coverage. 

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Section 1115 Waiver 101

We’ve already covered how Medicaid benefits are structured–mandatory versus optional–and the partnership between the federal government and the states in administering the program. But did you know that states can apply to the Secretary of Health and Human Services to waive certain requirements of Medicaid? Medicaid has not always been successful at serving its diverse and medically-complex population, including eliminating barriers to access and quality care and an inadequate focus on long-term health outcomes. Thus, federal law gives the Secretary of HHS the authority to grant Section 1115 waivers, also known as “Demonstration Project” waivers. [“1115” is the section of the Social Security Act that outlines the purpose and scope of these waivers.]

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The Medicaid Expansion Essentials

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Medicaid is a public insurance program for low-income individuals implemented by the Centers for Medicare and Medicaid (CMS). It covers 1 in 5 Americans–the most recent data from CMS reports 67.4 million individuals are currently enrolled–many with complex and expensive health care needs, the majority of whom lack alternative options for affordable health insurance. The program is statutorily governed by Title XIX of the Social Security Act and an extensive collection of regulations. In 2016, Medicaid spending was 17% of total national health expenditures–$565.5 billion out of $3.3 trillion.

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An Origin Story: Medicaid

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Medicaid (noun): health coverage provided through a joint partnership of the federal and state governments to millions of Americans, including low-income individuals, pregnant women, children, elderly adults, and individuals with disabilities. 

1937: President Franklin D. Roosevelt did not include national health insurance in the New Deal. The rhetoric of this time was similar to the 2008 election and subsequent passage of the Affordable Care Act , painting any potential government-financed health program as a socialized nightmare. Roosevelt responded to complaints from the American Medical Association (AMA) and put the issue to rest: “Attempts have been made in the past to put medicine into politics. Such attempts have failed and always will fail.”

1945: The AMA conducts the most expensive lobbying effort to date against President Truman’s plan for universal health care, calling such a program “un-American,” “socialized medicine,” and “followers of the Moscow party line.”

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The Medicaid Eligibility Game

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Medicaid is jointly administered by the Centers for Medicare and Medicaid Services (CMS) and individual state Medicaid agencies. CMS is an agency within the Department Health and Human Services (HHS), which in turn is overseen by the President. CMS sets program parameters, provides policy guidance, and approves waivers excusing states from certain requirement. CMS issues guidance on eligibility, enrollment, medical assistance, coverage, provider participation, provider payments, cost-sharing, and a host of other policy issues related to the program.

In turn, each state creates a uniform, state-wide medical assistance program that is embodied in a federally-approved state plan. The state agencies are free to make choices within the parameters set by the federal government, often through waivers or creative programming.

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Medicaid Financing & Reimbursement

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The U.S. spends about 10% of its budget on Medicaid and those expenses vary a bit by state. States like California with a very large Medicaid program spend upwards of $81 billion per year whereas Wyoming averages closer to half a million.

In almost every state, Medicaid is often the biggest program in state budgets after education. The cost of program is shared by the state and the feds using something called the Federal Medical Assistance Percentage (FMAP) to calculate the federal government’s contribution. Currently, Mississippi has the highest FMAP with the feds contributing nearly 76% of total Medicaid costs.

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