The latest GAO analysis of Medicaid Section 1115 waivers finds that the federal government does not always have a consistent policy of ensuring that the waivers are “budget neutral” to the federal government. GAO took a look at 10 Medicaid waivers approved in recent years to see whether there was a consistent policy that ensured that the federal government was not spending more under the waiver agreement than it would have in the absence of a waiver (the so-called “with waiver”and “without waiver” estimates). GAO also notes that there is not the level of transparency surrounding these agreements that one would expect from such a sizeable transaction involving considerable amount of funding – an observation well known to regular readers of SayAhh!! (See “Secret Life of Waivers” blog for more details on that point.)

Figuring out how much Medicaid would have spent in the absence of a waiver is a somewhat abstract question to which the answer may not be knowable. However, GAO makes some interesting points about inconsistencies in the waiver approval process with respect to the data that CMS uses to make this determination.  And some states were allowed to include some hypothetical costs that states were not actually incurring. Both the Bush and Obama administrations negotiated the agreements during the time period examined.

The report also finds that some states got better deals than others.  In particular, Texas and Arizona negotiated generous deals – both approved under the Obama Administration’s watch!

On the plus side, GAO notes that new transparency requirements established by the ACA are now in place and may help on that front.