A wave of Republican-controlled states are petitioning the Department of Health and Human Services (HHS) for permission to enact measures that will knock more people off Medicaid and the Trump administration has signaled they will give a green light to these efforts.
After the collapse of Obamacare repeal in Congress, which would have cut hundreds of billions of dollars and millions of people from Medicaid–the public health insurance program for the poor–red states and their allies in the Trump administration are preparing to use a powerful administrative tool as a backdoor route to that same goal.
Over the past few months, after Trump’s HHS signaled openness to granting these Medicaid waivers, nearly a dozen Republican-controlled states have submitted or are preparing to submit requests that they openly acknowledge will lead to fewer people being covered as a result. In those so-called waiver requests, some states are seeking to impose work requirements and drug tests on the low-income population that depends on Medicaid, while others are proposing cuts in coverage for vision, dental care, and non-emergency medical transportation, lifetime limits, defunding of women’s health clinics, and requiring people below the federal poverty line to pay insurance premiums.
The governors gunning for the waivers say it will save millions in taxpayer dollars and shore up the Medicaid program. But former HHS officials and health law experts tell TPM that these proposals—which HHS has all but promised to approve—undermine the purpose of Medicaid and could open the Trump administration up to lawsuits in the months ahead.
Under federal law, any waivers granted to states to loosen restrictions on how they administer Medicaid have to clear a fairly high bar. States must propose a “experiment” that tests ways to more efficiently and effectively promote Medicaid’s objectives—namely, providing affordable and quality health insurance to low-income people.
Proposals similar to those submitted this year requesting permission to impose a work requirement and to kick people off the Medicaid rolls after a certain period of time were previously rejected by the Obama administration.
“I’m not sure how denying coverage for people based on their inability to find work really meets the objective of providing health insurance to low-income individuals,” said Jessica Schubel, a senior advisor in the office that oversaw Medicaid at the Centers for Medicare & Medicaid Services (CMS) during the Obama administration. “As for the time limits, it’s intended to be an open-ended program that is there for people when they need it.”
Schubel, who now works on health care policy for the Center on Budget and Policy Priorities, noted that the Obama administration was not completely inflexible. Post-Obamacare, when several states were on the fence about expanding Medicaid, they approved waiver applications that allowed some states to make Medicaid beneficiaries pay a share of their health care costs.
“One example is Arkansas’ private option,” she explained. “It was an innovative approach that the state wanted to test, and it was a pathway forward to getting [Medicaid] expansion through. The same with Montana’s expansion waiver that included cost-sharing and premiums. We worked closely with them to provide exemptions for folks with chronic conditions.”
But this year, thanks to signals of increased leniency from HHS the early months of the Trump presidency, a host of states have moved forward with an array of waiver requests that never would have won approval before.
“Previous administrations of both parties had the goal of increasing Medicaid coverage,” said Eliot Fishman, who ran CMS’ office evaluating state Medicaid waivers from 2013 to early 2017. “Remember, the Bush administration negotiated the ‘Romneycare’ demonstration, [a precursor to Obamacare in Massachusetts]. They were actively engaged in trying to expand coverage through that demonstration.”
Fishman, now the senior director of health policy at Families USA, said what he saw in the early days of the Trump administration was a sharp departure from the historic goal of the Medicaid program.
“The use of Medicaid authorities to significantly reduce coverage is really novel and really legally suspect,” he told TPM. “Their fundamental principle is that it’s the state’s call in terms of restricting eligibility.”
Opening the floodgates
In March, HHS Secretary Tom Price and CMS Administrator Seema Verma wrote an open letter to the nation’s governors promising them “more freedom” from “rigid and outdated implementation and interpretation of federal rules and requirements.” The letter specifically encouraged states to submit proposals for booting unemployed people from the Medicaid rolls, saying HHS is now interested in “meritorious innovations that build on the human dignity that comes with training, employment and independence.”
With this green light, dozens of states submitted applications.
Indiana wants to require all able-bodied Medicaid recipients to work at least 20 hours a week. Wisconsin also wants a work requirement and wants to make Medicaid enrollees pass a drug test in order to receive benefits. Maine wants a work requirement and the ability to charge people premiums even when their income is well below the federal poverty line. Kentucky wants a work requirement, the elimination of coverage of vision and dental care, and the ability to kick someone off Medicaid if they fail to report even a small change in their financial situation. Texas wants to deny Medicaid dollars to women’s health clinics that provide abortions.
Not all states provide projections of how many people would lose coverage if the waivers are granted, though Kentucky estimates that 95,000 will be denied Medicaid, and Indiana predicts that about 25,000 won’t be able to comply with the new restrictions. Taken all together, Schubel estimates, the proposals have the potential to shrink the Medicaid rolls by disqualifying hundreds of thousands of people.
“The March letter from CMS really opened in the floodgate to proposals that in my view don’t comply with the purpose of Medicaid,” she told TPM. “They’re basically saying, ‘Hey, we’re open for business for any type of proposal.'”
A spokesperson for CMS declined to comment, saying he could not “speculate on future waiver policy.”
A decision on the first waiver in the queue, from Kentucky, could come in the next few weeks.
Sarah Somers, a managing attorney with the National Health Law Program, says if CMS approves it, it will embolden other states to seek similar passes.
“It’ll be a race to the bottom in some respects,” she warned. “If one state gets work requirements approved, there’s no reason to say a whole slew of new states won’t seek them.”
Somers told TPM that she believes many of the waiver applications currently pending are “not consistent with goals of Medicaid,” and the National Health Law Program may bring legal challenges if the Trump administration grants them.
“We are exploring all legal options,” she said. “We feel they amount to burdens placed on people who are already way overburdened, and they weed out people who should be able to get assistance.”
In particular, Somers expressed concern about Wisconsin’s plan for mandatory drug tests, and the five states that want to impose a work requirement. Wisconsin’s application estimates that they will lead to about 5,102 fewer people being enrolled in the program over five years. But when Wisconsin enacted a similar work requirement for their state food assistance program, it led to more than 70,000 people losing their benefits over just two years.
It’s a policy, Somers says, that is “based on a negative stereotype of low-income people.”
“To have a rule requiring people to work is based on a misconception that people covered by the Medicaid expansion aren’t already working,” she said. “This is a majority working poor population, and if they aren’t working, it’s because they can’t.”
A study by the Kaiser Family Foundation found that only 27 percent of Medicaid recipients are adults without disabilities, and 60 percent of that group are already working. Many of those not employed care for a family member full-time, have a criminal record, live in an area without job opportunities, or face other “major impediments” to employment.
A spokesperson with Wisconsin’s Department of Health Services told TPM that the waiver will “help more people move from government dependence to true independence by encouraging work and providing incentives for healthy lifestyles.” They added that they are “cautiously optimistic” about winning approval from CMS.