Emerging Themes in Proposed State Medicaid Waivers

Under the current administration, the Centers for Medicare and Medicaid Services (CMS) has signaled a willingness to evaluate new types of Medicaid proposals from states. Specifically, in March of this year CMS indicated that the agency would consider Medicaid waiver applications that include programs to connect individuals to employment or incorporate features of private market coverage, such as enforceable premiums or alternative benefit designs and cost-sharing models. In response to CMS’ letter, some states have developed proposals that include these types of requirements for certain individuals covered by the Affordable Care Act’s (ACA) Medicaid expansion—and a few states are seeking similar changes for their non-Medicaid expansion populations.

Of the 31 states and the District of Columbia that have implemented the ACA’s Medicaid expansion, currently seven states—Arizona, Arkansas, Indiana, Iowa, Michigan, Montana, and New Hampshire—have expanded Medicaid through a Section 1115 waiver. Arkansas and Indiana already require premiums but now seek modifications to their existing waivers to add changes such as new enrollee work requirements. Arizona originally expanded Medicaid without a waiver but then sought one that was approved in the fall of 2016, and the state is in the process of preparing to seek additional changes. Kentucky, which also initially implemented the ACA’s Medicaid expansion without a waiver, has a pending waiver request to incorporate a number of conditions individuals must meet to remain enrolled.

As of mid-June 2017 two states—Maine and Wisconsin—have submitted waivers to add certain enrollee requirements for individuals in their traditional Medicaid programs. Some of the proposals have not been approved for any Medicaid groups previously—including the individuals newly eligible through the ACA.

Some of the common themes that states are pursuing under their waiver requests include disenrolling individuals for non-payment of premiums, work requirements as a condition of eligibility, and time limits on coverage. States that are adding work requirements such as Indiana contend that employment can improve health outcomes and financial stability. Some of Kentucky’s waiver goals include improving individuals’ health, encouraging individuals to be “active participants and consumers of healthcare,” and to seek employment and transition to commercial coverage. Other states such as Maine indicate the purpose of its waiver is to preserve state financial resources for the most needy individuals, as well as promote financial independence, transitions to private market insurance, and individual responsibility for health and health care costs. Wisconsin, which is requesting to add drug screening and testing requirements, believes that these procedures will help identify individuals who may need substance use disorder treatment.

States considering similar proposals for Medicaid enrollees will need to take into account the potential for increased administrative costs and staff burdens associated with tracking individuals’ compliance to various requirements, determining which populations are exempt, and providing clear information to beneficiaries about complex program rules. Preliminary findings from interim evaluations of both Indiana’s and Iowa’s waivers showed that many enrollees were not aware of or did not understand that their premiums could be reduced by participation in healthy behavior activities. Also, work requirements would likely apply to only a small portion of individuals, because most adults with Medicaid coverage are already connected to employment. Data from 2015 indicate that almost eight in 10 are in working families, and 59 percent are working themselves. The majority of adult Medicaid enrollees who are not working reported having an illness, disability, caretaker responsibilities, school obligations, were retired, or already looking for work. Additionally, if eligible individuals are disinclined to enroll in Medicaid due to work requirements, premiums, or time limits, or lose coverage for not meeting these conditions, individuals may delay obtaining needed care and states may face increased uncompensated care costs if individuals instead seek treatment through emergency departments.

Descriptions of the Medicaid program changes that states are currently proposing are available here. As states continue to explore new options in Medicaid that may be available under the current administration, NASHP will track these proposals in the coming months. For full details on states’ ACA Medicaid expansion activity, see NASHP’s Medicaid expansion map.