The white house shared a new plan that would radically revamp Medicaid by allowing states to opt-out of a part of the current federal funding program and seek a fixed payment annually in exchange for achieving unprecedented flexibility over the schedule.
Medicaid, a federal-state health program that involves 1 in 5 Americans, has been an open-ended entitlement since its start in 1965. That means the total amount of money given by the federal government grows with growth in health expenses and enrollment.
The government said the new program would enable states to provide patients more benefits while controlling government spending. However, the strategy was attacked by Democrats, health providers, and consumer advocates, as undermining efforts to serve the poor.
States would have the option to not switch to the new model. It will be a choice, and states interested in would need to seek authority from the federal government. This makes the program less comprehensive than attempts by Republican legislators to renew Medicaid, which were contained in 2017 failed legislation to gut the Affordable Care Act.
The guidance to states on turning Medicaid into a block allows the Trump administration to proclaim it’s modifying the Medicaid program and offers a way for states that haven’t expanded under the Affordable Care Act to move forward.
It could also tee up an election-year struggle in which competitions will use the strategy to argue that it is President Donald Trump’s latest salvo in a long-time effort to unravel the health care safety net.
“The Trump government’s statement today is a game-changer,” said Kevin Stitt, a Republican who plans to increase coverage up to ACA levels and pursue a block grant with a Medicaid labor condition and new premiums.
Here are the things to understand about how the new plan works.
Millions Of People May Be Impacted By Block Grants
Millions of low-income people without children who acquired coverage under the Medicaid expansion of the ACA could be included under a block grant. Prominent Republicans, including executives in the Trump government, have argued that covering those adults utilizes resources equipped toward other Medicaid enrollees whose needs are higher.
However, a state could decide to include certain pregnant women and low-income parents because their coverage is not mandated by federal law.
Tens of millions of individuals currently enrolled in Medicaid wouldn’t be included in a potential state block-grant program, including children, individuals who qualify for the program based on disability, individuals requiring long-term care and people who are 65 and over, according to the guidance announced by the Centers for Medicare & Medicaid Services on Thursday.
States looking for the new authority would be able to make further cuts to benefits, such as prescription drugs are covered, and inflict new out-of-pocket prices on enrollees.
Medicaid traditionally has included all federally approved prescription medicines. In June 2018, the Trump government strengthened that position when it refused a petition from Massachusetts Gov. Charlie Baker to restrict drugs included under the state’s Medicaid program.
Under the new regulation, a state could ask to cover only one drug per class for most conditions — similar to what is necessary for private insurance coverage in the Affordable Care Act market.
While the rule enables exceptions, including for medications to treat behavioral health issues or HIV, the policy change may impact access to medicines for a variety of serious ailments, such as cancer.
Another change contained in the policy of the administration is what types of copays states can charge, as per Cindy Mann, a lawyer who headed the Medicaid program under the Obama government and is now a specialist with Manatt, Phelps & Phillips.
While a Medicaid enrollee can’t be charged premiums and out-of-pocket prices that exceed 5 percent of the household income, the advice eliminates additional restrictions on copays, opening the door for their more widespread use and in higher quantities. Those changes will disproportionately impact people with more severe health issues, she said.
“Even a copay that is $1 can be a trouble,” Mann said. “These could support copays, which are considerably more than that.”
States can move to remove other Medicaid advantages, such as nonemergency medical transport and a nice collection of preventatives, diagnostic and treatment services which are a pillar of the program — called the EPSDT (Early and Periodic Screening, Diagnostic and Treatment) advantage — for 19- and 20-year-olds.
The national government will exercise less supervision over the private health insurance firms that states hire to run their programs, providing states more power to set rules on provider participation and payments.
Around two-thirds of Medicaid, associates are enrolled in a private managed-care firm, and the proposal would eliminate federal oversight of how these companies work. States would have the ability to choose if they would like to follow federal rules trying to be individual health plans provide reasonable access to a decent number of in-network hospitals and physicians, said MaryBeth Musumeci, associate director for the Kaiser Family Foundation Program on Medicaid and the Uninsured. Additionally, the federal government wouldn’t need to approve payment rates before they take effect, she said. (Kaiser Health News is an editorially independent application of the foundation.)
A few states have functioned under Medicaid spending caps before, including Rhode Island, but the numbers have been set so high a state was not at any risk of hitting the goal, Musumeci said.
The CMS guidance didn’t determine how much the new financing system could save the federal budget.
All States Could Apply For A Block Grant, But Most Are Unlikely
Just a few states would be expected at least initially to apply for the block grant, and those would almost surely be some of the 14 states that haven’t extended Medicaid, said Matt Salo, executive director, National Association of Medicaid Directors.
Although, many states would be concerned about the loss of financing or not having enough dollars when demand for registration or services rose.
“States will be asking: Is the further flexibility worth the risk or the drawback of another funding arrangement?” Salo said.
Still, he added, for some provinces that have not expanded eligibility, “this is a call for them to the finish line.”
Other state proposals to seek capped Medicaid funding — notably Tennessee’s, which is pending with the Department of Health and Human Services — are much different from what the Trump strategy telegraphs. Having said that, some Republican-led development states are also possible to find it appealing.
“Waivers will never be long-term replacements for congressional activities. However, this does represent a considerable opportunity to test new ideas to see what works and especially to understand just how much risk states are prepared to take in exchange for increased control,” said Dennis Smith, who conducted Medicaid through the George W. Bush administration and is currently a senior advisor for Medicaid and health betterment for Arkansas Gov. Asa Hutchinson. “If a person expects a crop, a person first must sow the seed.”
The Effect Will Not Be Seen Anytime Soon
The federal government usually moves slowly in approving new state jobs, particularly for ones that set a new precedent or are controversial. Provided that, it’s unlikely any state would get a waiver before 2021 — when there could be a change in government administrations.
Plus, there is all but sure to be an action that could impede the whole effort.
“The record issued today by CMS appears to unveil bedrock provisions of Medicaid, an action that’s beyond the scope of CMS’ power. Only Congress is tasked with making these modifications,” said Jane Perkins, director of the National Health Law Program, an authorized aid group that has sued over the Trump administration’s approval of work demands for several Medicaid enrollees in five states. It is determining litigation options on the block grants.