Where Does the Trump Administration’s Medicaid Waiver Policy Go Next?

Last week was a busy week with a federal court vacating both Arkansas and Kentucky’s Medicaid Section 1115 waivers on Wednesday and the Trump Administration approving Utah’s partial expansion waiver with a work requirement and an enrollment cap on Friday—but without the full expansion match. (Read more on Utah past and present).

Given the immediate approval of Utah’s waiver following the judge’s ruling, it seems clear that the Trump Administration does not intend to slow down its relentless efforts to undermine key aspects of the Medicaid program through its use of Section 1115 waiver authority–lawful or not.

Utah’s enrollment cap directly conflicts with Medicaid’s guarantee of coverage for those who meet income eligibility requirements. And just yesterday, news broke that CMS Administrator Seema Verma has encouraged Alaska to become the first state to receive its Medicaid funding through a block grant arrangement, and the Governor seems intent to move forward on this offer.

How this new and extreme effort will unfold remains to be seen. We expect federal matching funds would be front loaded to offset declining state revenues. But given that Congress explicitly rejected a per capita cap on Medicaid in 2017 when the ACA repeal effort failed, and that federal matching rates can’t be waived under Section 115 of the Social Security Act, these “block grant” waivers are sure to end up in court as well if they are in fact developed, submitted, and approved.

As I like to point out, CMS has now approved waivers in most purple or red states that had already taken up the Medicaid expansion before the Trump Administration took office. These include Arkansas and Kentucky (which are no longer in effect given the judge’s order), and New Hampshire, which is the next state implementing work requirements with coverage losses scheduled to begin in August.

Litigation has been filed on the New Hampshire waiver, and the case has been assigned to the same judge that just ruled in the AR/KY cases–so one would expect a similar outcome there. Other states that have received approval but are not yet implementing their waivers (or are in the very early stages) include Indiana, Arizona, Michigan, Wisconsin, and Ohio. Both Michigan and Wisconsin have new Governors who have reservations about going forward.

So what is next for CMS with respect to waivers that are pending?

Virginia has a pending proposal that includes work reporting requirements on their relatively new expansion, which began providing coverage on January 1, 2019, through a state plan amendment. The federal comment period for Virginia ended on January 6. One would expect this will be approved by CMS as it is similar to recent approvals.

The next issue squarely on CMS’ plate is the question of whether to approve work requirements in states that have not expanded Medicaid. In these states such a decision would allow punitive work requirements to be imposed on the very low-income parents and caregivers who qualify for Medicaid coverage in AlabamaMississippiOklahomaSouth Dakota, and Tennessee.

Table 1 shows when the federal comment period ended in all of the pending states.

The harm from work requirements would be even worse in these states because the only adults impacted would be parents and caregivers with extremely low incomes. Moreover, the Medicaid statute requires states to cover these parents, which raises additional legal questions.F

In Alabama, for example, only the poorest parents and caregivers, those making 18 percent of the poverty level or less—$3,740 a year for a family of three or about $312 a month—now qualify. These parents would lose Medicaid if they met the work requirement because their earnings would send them over the eligibility level, and lose coverage if they don’t meet the work reporting rules for noncompliance.

Thousands of parents will lose coverage if these move forward and many of their children are likely to lose coverage as well. As regular readers of SayAhh! know, the likelihood of a child being uninsured grows substantially when they have an uninsured parent. Our most recent report looking at Tennessee projected that if the state is permitted to move forward, and coverage losses are similar to what has occurred in Arkansas, as many as 68,000 parents in Tennessee would lose coverage.

A recent letter to Secretary Azar from the American Academy of Pediatrics and more than 50 national groups highlighted the harm to children and families that could arise from a decision to allow non-expansion states to do work reporting requirements. At the same time, the number of uninsured children is rising–a troubling trend the Trump Administration appears to be completely ignoring.

F Full disclaimer I am not a lawyer, but this strikes me as an obvious issue especially since much of the Administration’s defense in the AR/KY cases was structured around their claim that the expansion population is “optional.”

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.