Pennsylvania’s Medicaid Waiver Proposal Does Not Impress


Last Friday, Governor Corbett’s Administration released it’s Section 1115 waiver application draft. This initiates the process for the required 30-day state comment period that must precede the submission of the waiver request to the federal government. The state will be holding a series of public hearings and webinars with the final hearing in Harrisburg scheduled for January 9th. At stake is coverage for more than 500,000 Pennsylvanians.

There is a lot of interest and movement in many quarters in PA to move forward and accept the federal dollars to expand Medicaid to parents and other adults below 133% of the federal poverty line. Parents, as of January, will only be eligible for Medicaid at a measly 38% of the FPL in Pennsylvania. Indeed PA is bordered by two states with Republican governors—Ohio and New Jersey – which have done a straight Medicaid expansion that will go into effect January 1st.

Reading the proposal, I had to wonder whether or not Governor Corbett really wanted to move forward in accepting federal funding to offer coverage to more uninsured Pennsylvanians. The proposal, which is the first in the nation to seek to condition eligibility for Medicaid on work search requirements, lays out a complicated maze of bureaucratic foxholes that will result in massive red tape and unprecedented government scrutiny into the lives of these low-income adults. The proposal is more punitive and restrictive than any Medicaid expansion proposal I have seen so far.

The Governor argues that he wants more people to work because people who work are healthier.  Well yes, but I think he has the causality reversed here. His proposal prohibits people from getting Medicaid if they are not working or engaging in work search activities.

I would argue that to achieve his goal of encouraging work, the answer is to provide Medicaid coverage – not cut people off from health care! The findings of the much-lauded Oregon Medicaid study showed clear improvements in levels of depression, for example, after low income adults received Medicaid coverage. Maternal depression is rampant among low-income mothers, and there are effective treatments available if those afflicted can afford them. I feel certain that low-income adults with improved mental and physical health are in a better, not a worse, position to get jobs.

And, while he is in the neighborhood, the Governor seeks to impose new benefit limits on those adults receiving Medicaid today! His approach there is flawed too for reasons I will try to blog about another day.

More complicated and punitive than Arkansas’s waiver

Like Arkansas, the Corbett proposal seeks to enroll the newly eligible in the new marketplace. That is something that has pluses and minuses as I have blogged about before, but is a path worth considering with careful scrutiny in place.

However, Pennsylvania’s proposal goes much further down the path of loosening beneficiary protections.  Arkansas’s waiver demonstration project only required 3 waivers of federal law.  Pennsylvania is seeking more than 7 times that many with a whopping 23 waivers of federal law being requested.  (Remember, the purpose of Section 1115 waivers is to innovate and uncover promising new approaches to health care coverage not to circumvent federal law. )

When I see a waiver proposal for the first time, I always read the list of waiver requests first. That’s because such requests are where the rubber hits the road – what aspects of federal law does the state want to get rid of?

I’m sure I would lose my audience if I went through the laundry list of all 23 requests so I’ will summarize them. Pennsylvania’s proposal seeks to waive all the Medicaid benefits not covered in the exchange package including non-emergency transportation, family planning services, community health center services (and limit these clinics’ reimbursement), drugs not on the exchange plans’ formularies, and the 90-day retroactive eligibility that Medicaid currently provides.

The state also seeks the ability to deny Medicaid for up to 9 months for those who fail to comply with work search activities described in the proposal and/or who fail to comply with premium requirements also outlined in the proposal. (For more on where CMS just came down on premiums  see my blog on the recent Iowa waiver proposal.)

More Extreme than Iowa’s waiver

The Corbett proposal picks up on the wellness theme that Iowa is built around (a laudable objective to be sure) but again, takes it in a more extreme direction. The heart of the Iowa wellness strategy is to charge premiums starting in year two (no premiums in year one) that can be waived if the beneficiary gets a physical and health risk assessment in year one.  Here is the language from the CMS waiver terms and conditions:

“The conditions to be met by an individual in year 1 of enrollment as a condition for not being liable for monthly contributions in year 2 are completing a health risk assessment and wellness exam (annual exam).”

By the way, Iowa intends to grant full premium forgiveness, but the Corbett plan would only grant 25% premium forgiveness, with another 25% forgiven for complying with work search requirements – so best case scenario 50% discount. They don’t specify what the premiums will be.

What happens after that, and beyond the first two years, is not clear in the Iowa agreement – the state must submit further details of its plans for review and approval. But Governor Corbett’s proposal provides some scary foreshadowing of what’s in store for those who rely on Medicaid for health care coverage in Pennsylvania.

The Corbett proposal says, “After 3 years, the Department will evaluate HRA data and determine broader healthy behaviors that should be used, such as cholesterol testing. The 1115 Demonstration application seeks flexibility and authority to change or expand the list of healthy behaviors for which premium reductions are available.”

Talk about health reform getting into your business!!!

I could go on, but let me summarize by saying that the Governor needs to put a more realistic proposal on the table if he really wants to move forward. The goal of the ACA is to facilitate coverage but this waiver request would do the opposite in many respects.

Let’s hope that after the state comment period, the Governor submits a more constructive proposal to the federal government.


Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.