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Research & Commentary: Maine Joins States Seeking Waivers to Reform Medicaid

September 6, 2017

In this Research & Commentary, Matthew Glans examines a 1115 Medicaid waiver request by the State of Maine which includes a request for permission to create new premiums and enforce work requirements.

According to the National Association of State Budget Officers, Medicaid now consumes 23.6 percent of state governments’ expenditures. Fortunately for state policymakers, there is an option available to them that can help create greater access to high-quality, more-affordable health care without increasing state budgets or the national debt: Section 1115 waivers.

Like many other states, Maine has submitted a Section 1115 waiver request to the Department of Health and Human Services (HHS), which, if approved, would allow the state to make major changes to its Medicaid program. Section 1115 waivers give states the opportunity to waive key portions of their Medicaid programs. 1115 waivers have been available for decades, historically; they have been used for either coverage expansions, which was common in the late 1990s and early 2000s, or expansions of contraceptive and family planning coverage.

While these waivers cannot institute widespread systemic changes the way block-granting could, they would allow states to make significant alterations to their Medicaid programs. To get a Section 1115 waiver approved, a state must prove to the secretary of HHS that its proposal meets the goals of the Medicaid program and federal budget requirements. Section 1115 waivers generally are approved for a five-year period and then must be renewed. Maine’s 1115 waiver, which was submitted to HHS in May, tackles several areas of Medicaid, including premiums and cost-sharing, penalties for missing appointments, asset testing, and work requirements.

The Maine waiver asks permission to create new premiums for Medicaid enrollees. Under its proposal, Maine would create a sliding scale for health care insurance premiums, which would be based on income. According to Manatt, Phelps, and Phillips, a law firm, the proposed premium amounts are $14 per month for individuals with incomes from 0 percent to 100 percent of the federal poverty level (FPL), $43 per month for individuals with incomes from 101 percent to 200 percent FPL, and $66 per month for individuals with incomes at or above 201 percent FPL. For enrollees with incomes below 138 percent FPL, the premiums would exceed current Medicaid limits and require waiver approval.

Enrollees failing to pay the premium would be disenrolled from coverage and subject to a 90-day lockout period, but they would be given a 60-day grace period to resolve any outstanding payments. To re-enroll in the program, enrollees would be required to pay all missed premiums.

The waiver also calls for a new $20 copay for any emergency department visit that does not result in an inpatient admission.

In addition to the cost-sharing changes, Maine is also seeking the authority through its waiver to charge Medicaid enrollees a financial penalty for missing appointments. The goal of this penalty is to give enrollees a stake in their health care coverage and to encourage them to make responsible choices.

With its waiver proposal, Maine joins several states – including Arizona, Arkansas, Florida, Indiana, and Ohio – that are in the process of crafting or submitting waivers from CMS for Medicaid overhauls that would include work requirements. Medicaid recipients would be required to work or be enrolled in a qualified educational program for an average of 20 hours per week. Other activities that would satisfy the work requirement include pursuing training, volunteering for 24 hours per month, or qualifying for Maine’s Supplemental Nutrition Assistance Program or Temporary Assistance for Needy Families work requirements. All recipients aged 19 to 64 would be subject to the work requirements.

According to Manatt, Phelps, and Phillips, exemptions would be given to several groups, including those who are pregnant, in a residential substance-abuse disorder treatment program or an institutional residential facility, caring for a young child or disabled dependent, receiving disability benefits, or are deemed physically or mentally unable to work. Those failing to meet the requirements for more than three months during a 36-month period would be disenrolled, but they could re-enroll after meeting the requirements.

Work requirements have proven successful in the past when introduced as part of other entitlement programs. They reduce poverty by encouraging work and self-reliance.

The most recent significant reform sought in Maine’s waiver would allow the state to implement an asset test for all Medicaid recipients, based on their modified adjusted gross income. Those with assets exceeding $5,000 would be considered ineligible for Medicaid. Asset tests are an important tool in managing the cost of welfare programs.

Other waivers that states can apply to HHS for include:

  • Providing more flexible benefits packages, allowing the enrollment of Medicaid beneficiaries in subsidized employer coverage without providing cumbersome “wrap-around” benefits.
     
  • Allowing states to implement payment enforcement mechanisms to encourage enrollees to pay for additional cost-sharing, such as co-pays.
     
  • Allowing employers to provide contributions to employees to purchase individual health care coverage in lieu of offering employer-sponsored group health care coverage.
     
  • Permitting states to define what is considered a “qualified health plan” in the individual and small group markets.
     
  • Allowing states to deploy incentives for enrollees to engage in healthy behaviors, such as attending primary care appointments, completing a health assessment, engaging in physical activity, or quitting smoking.
     
  • Permitting states to set a time limit on coverage.
     
  • Conducting monthly income verification and eligibility renewals, as Arizona has proposed.
     
  • Using waivers to make changes in what exchange recipients pay, the benchmarks for setting the payments, and the rules concerning family size and income eligibility.

Medicaid should focus on encouraging able-bodied recipients who are enrolled in these programs to become more self-sufficient and less dependent on government aid. The real focus of these programs must be to provide temporary or supplemental assistance while encouraging work and independence. The waiver process gives states the flexibility they need to improve health care affordability and quality of care.

The following documents examine Medicaid reform and the waiver process in greater detail.
 

Five Key Questions and Answers About Section 1115 Medicaid Waivers
http://www.kff.org/health-reform/issue-brief/five-key-questions-and-answers-about-section/
This Issue Brief from the Kaiser Family Foundation provides an overview of what Section 1115 Medicaid waivers are, how they are approved and financed, how states have used them, and how they have impacted health care reform.

Maine Releases Draft Waiver Request Proposing New Eligibility Requirements
https://www.manatt.com/Insights/Newsletters/Medicaid-Update/Maine-Releases-Draft-Waiver-Request-Proposing-New
Researchers at Manatt, Phelps, and Phillips examine Maine’s draft Medicaid waiver proposal. They discuss in detail how it would modify eligibility requirements and features of coverage for much of the state’s Medicaid population.

A Survey of State Medicaid Expansion 1115 Waivers
https://www.americanactionforum.org/research/primer-survey-state-medicaid-expansion-1115-waivers/#ixzz4qbhB5TwN 
Tara O’Neill Hayes of the American Action Forum examines several recent Section 1115 waiver proposals and discusses how they seek to reform Medicaid.

Research & Commentary: States Pursue Work Requirements for Medicaid
https://www.heartland.org/publications-resources/publications/research--commentary-states-pursue-work-requirements-for-medicaid?source=policybot
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines efforts by several states to add work requirements to their Medicaid programs. “Implementing Medicaid work requirements would be a good first step for Medicaid-expansion and non-expansion states toward helping to limit the rising costs of Medicaid,” Glans wrote.

Kentucky Seeks Stricter Medicaid Work Requirements
http://thehill.com/policy/healthcare/medicaid/340721-kentucky-seeks-stricter-medicaid-work-requirements
Nathaniel Weixel of The Hill examines Kentucky’s new efforts to reform its Medicaid program. Kentucky lawmakers have asked the Centers for Medicare and Medicaid Service for permission to impose stricter work requirements for Medicaid beneficiaries. The new waiver request updates a previous request to overhaul the state’s Medicaid program.

Research & Commentary: Why Arkansas’ Medicaid Rollback Could Be a Model for Expansion States
https://www.heartland.org/publications-resources/publications/research--commentary-why-arkansas-medicaid-rollback-could-be-a-model-for-expansion-states?source=policybot
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines Arkansas’ rollback of its Medicaid expansion program and discusses how other states could follow its lead. “States that have not expanded should avoid doing so, but for states that have expanded Medicaid, Arkansas’ reforms could be a good model for limiting the growth and cost of Medicaid expansion. Other states should take advantage of the waiver process while there is an administration in the White House willing to approve reform-minded Medicaid changes,” wrote Glans.

The Value of Introducing Work Requirements to Medicaid
https://www.americanactionforum.org/research/value-introducing-work-requirements-medicaid/
Ben Gitis and Tara O’Neill Hayes of the American Action Forum examine the value of work requirements and argue more work requirements are needed in other safety-net programs, including in Medicaid.

Poverty After Welfare Reform
https://www.manhattan-institute.org/html/poverty-after-welfare-reform.html
In this Manhattan Institute study, Scott Winship examines the effect of the welfare reforms implemented in the 1990s on poverty: “Deep child poverty was as low in 2014 as it had been since at least 1979 after including refundable tax credits and noncash benefits (other than health coverage) in income, counting household heads’ cohabiting partners as family, and applying the best cost-of-living adjustment to the poverty line. Adding health benefits indicates that deep child poverty was lower by 0.3 percentage points in 2014 than in 1996, and lower than any other year going back to 1979,” wrote Winship.

The Personal Health Care Safety Net Medicaid Fix
https://www.heartland.org/publications-resources/publications/personal-health-care-safety-net-medicaid-fix
This article by Justin Haskins, Michael Hamilton, and S.T. Karnick of The Heartland Institute outlines a proposed reform plan for Medicaid, the Personal Health Care Safety Net Medicaid Fix. The authors say their Medicaid Fix would expand patient choice and give each Medicaid enrollee real money, not false promises, in the form of a personal safety net that would empower even the poorest of families to take care of itself and give more than 70 million Americans access to the private health insurance market.

The Oregon Experiment—Effects of Medicaid on Clinical Outcomes
https://www.heartland.org/publications-resources/publications/the-oregon-experiment--effects-of-medicaid-on-clinical-outcomes?source=policybot
This article from The New England Journal of Medicine examines Medicaid outcomes in Oregon. Oregon gave researchers the opportunity to study the effects of being enrolled in Medicaid (compared to being uninsured) based on data from a randomized controlled trial, the “gold standard” of scientific research. The results showed no improvement in health for enrollees, but it did reveal better financial protections for patients and increased medical spending.

Why States Should Not Expand Medicaid
https://www.heartland.org/publications-resources/publications/why-states-should-not-expand-medicaid?source=policybot
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington, DC greater control over spending to better fit coverage expansion to states’ needs, resources, and budgets.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

If you have any questions about this issue or The Heartland Institute’s website, contact John Nothdurft, The Heartland Institute’s government relations director, at john@heartland.org or 312/377-4000.

Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR