Pennsylvania Becomes 28th State to Expand Medicaid, Governor Compromises on Many of His Requests….

As readers of Say Ahhh! know, we have been closely watching the path of Governor Corbett’s proposal for Pennsylvania Medicaid expansion known as “Healthy PA.” Today, the governor received official approval for his Medicaid Section 1115 Research and Demonstration proposal. Pennsylvania becomes the 28th state (including DC) to expand Medicaid.

I have blogged previously about the problems with the governor’s proposal. My main question was whether or not Governor Corbett was serious about expanding and would be willing to compromise. Otherwise his proposal seemed destined to end up in the rhetorical trash heap.

Today, from a quick scan of the agreement, it seems that the governor was serious about getting to yes, and many of the waiver requests he originally sought have been dropped. The original application requested 24 waivers of 15 provisions of federal law. The final agreement included only four—one of which was the ability to enroll beneficiaries in managed care, which doesn’t actually even require a waiver.

In comments developed jointly with the Center on Budget and Policy Priorities we highlighted the most concerning proposal elements – here is what happened to them in a nutshell:

Work requirement: We thought CMS would say no dice to conditioning Medicaid eligibility on work participation or work-related requirements, and they did just that– the governor had pulled this back a while ago and made it a voluntary pilot program. The final agreement includes only a rhetorical link to a state job training program; Medicaid funds are not involved.

Premiums: CMS held the line here with what other recent states like Iowa have been granted—premiums can only be charged to those above the poverty line and must be in line with marketplace charges for the same income levels (2% of income). Like Iowa, those beneficiaries who obtain a physical (i.e. comply with the “healthy behaviors” program) will see their premiums reduced. And, again, no dice on Corbett’s vague request to charge premiums to folks below poverty down the road.

Benefits: The state had also requested a number of benefit waivers including freedom of choice of family planning providers, non-emergency transportation and others. CMS here did as they have done elsewhere – a limited waiver of non-emergency transportation was granted. That is unfortunate, as Say Ahhh! readers know, but certainly an improvement from the original request.

Cuts in benefits for current Medicaid beneficiaries were removed from the waiver agreement, as we recommended, because they are not related to the intent of the demonstration to expand coverage and shouldn’t be granted in any event.  Yet one of the most troubling aspects of today’s announcement is Governor Corbett’s intention to move forward with as many cuts as he can in benefits for current adult Medicaid beneficiaries who are deemed “low risk.” We will need to analyze this further, and discussions are still underway here, but CMS has made clear that no waivers will be granted and cuts will move forward. Medicaid law offers quite a bit of flexibility to limit benefits for adults, and it seems the governor is intent on exploiting every bit of this flexibility to limit benefits for very poor parents currently enrolled.

Use of private coverage: This is a longer topic for another day— fuzzy rhetoric abounds on this subject, especially in this waiver. Pennsylvania’s Medicaid program already delivers services through private managed care companies. The initial waiver request was not clear on exactly how the governor wanted to proceed – whether through the exchange, the private market outside the exchange or some new way. The state has already issued an RFP for plans that want to participate in Healthy PA; those responding are largely those that are already serving Medicaid beneficiaries. So the waiver will not boost the involvement of private insurers in Pennsylvania’s Medicaid program – most analysts expect that expansion beneficiaries in most states will go into Medicaid managed care plans. And while the waiver agreement preserves Medicaid managed care rules, it does break some new ground by allowing the state’s Department of Insurance to enforce its own rules where they have been deemed compatible to those in Medicaid. So same plans, same rules (in theory), but a new twist on state enforcement. That is not what I would call an infusion of private insurance. But, as I said, a complicated question for another day, perhaps its own blog post. (So, of course, stay tuned to Say Ahhh!)

Many have said that a straight expansion would be the simpler and smarter way to go. I agree. But coverage for approximately 500,000 Pennsylvanians (according to the state) is too important to not continue forward. Governor Corbett is in a tight race to keep his position. Should his Democratic challenger be elected in November, the new Governor Wolf can pull out of the waiver and switch over to a straight Medicaid expansion without too much trouble. But in order to get coverage up and running by January 1, 2015, under either approach, the state needs to get started. So the waiver approval is welcome news.



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.