Just before the end of the year, the Biden Administration took an important stand protecting people enrolled in Medicaid. Three states (AR, GA, and MT) received news from CMS the week before Christmas on section 1115 Medicaid waiver requests of various kinds – but with one common element – that their plans to charge premiums to low-income adults enrolled in Medicaid would not go forward. Arkansas and Montana were given one year to phase out the existing premiums by December 31, 2022. Georgia’s plan to charge premiums had not yet been implemented.
The Biden Administration’s painstaking rollback of Medicaid work requirements has been well-documented and publicized. But as we have repeatedly pointed out, there are other policies in section 1115 waivers that constitute barriers to coverage – most notably premiums. CMS had not previously rendered judgment on this question – although a close reading of the Executive Order issued by President Biden on January 28th suggested that work requirements were not the only barriers that would be re-examined.
Arkansas and Montana have been charging premiums to adults in their versions of Medicaid expansions, while Georgia was seeking to impose premiums (and work requirements) on adults who would be eligible for a mini-expansion alternative that Governor Kemp had received approval for from the Trump Administration. The state had put implementation on hold until 2022 at the earliest, necessitating CMS action prior to the end of 2021. Georgia’s request to do a small expansion at regular match was given the green light to proceed by the Biden Administration, but without authority to impose work requirements or charge premiums. State leaders have subsequently threatened to sue the Biden Administration.
In general, Medicaid law prohibits the charging of premiums to lower-income enrollees, which is why states have turned to the section 1115 route when they wanted to do so. But as readers of SayAhhh! know, section 1115 demonstrations are intended to test new approaches that promote the objectives of Medicaid. As we have long argued, research is clear that premiums deter enrollment in Medicaid for low-income people. As such, they do not promote the central objective of Medicaid which is to provide health insurance to low-income populations.
Arkansas received approval for a “new” version of its existing demonstration which uses a premium assistance model to provide adult expansion coverage through the federal marketplace. The state has been charging premiums of 2% to adults with incomes between 100 and 138 percent of the federal poverty line since 2017. The two percent charge was initially tied to comparable requirements to pay premiums for subsidized coverage in the ACA marketplace. However, since the enactment of the American Rescue Plan Act, anyone with income below 150 percent of the poverty line in the marketplace has not been paying premiums – meaning Medicaid beneficiaries in Arkansas were paying more than those with similar or higher incomes elsewhere.
Montana had also been imposing premiums, though on a larger portion of its expansion population (individuals with incomes between 50 and 138 percent FPL), as part of its version of expansion. Montana was allowed to disenroll individuals with incomes above 100 percent FPL for failure to pay their premiums and limit tax refunds for all. Montana’s demonstration was given a one year approval during which the state must wind down the premiums. The state also eliminated its continuous eligibility for adults in expansion leaving no further need for a section 1115 (as opposed to a regular state plan amendment for its expansion) after the premiums wind down at the end of 2022.
It is clear from the timing and congruity of the CMS actions in these three states that the Biden Administration has drawn a line in the sand. States with current section 1115 authority to charge premiums should take notice. These include Iowa, Indiana, Michigan and Wisconsin.1 While no state can currently disenroll anyone for nonpayment of premiums due to the disenrollment freeze established during the public health emergency, it is unclear when this freeze will be lifted.
The Biden Administration’s decision is good news for low income families who rely on Medicaid for their health insurance as well as the integrity of Section 1115 policy. Premiums serve no useful function in the Medicaid program. They generate administrative costs and hassles for providers and plans. And most importantly they keep people uninsured.