Trump Greenlights Major Medicaid Changes

This story was originally published by Stateline, an initiative of The Pew Charitable Trusts.

In a stark departure from past administrations, the Trump administration is allowing states to enact new Medicaid rules that will curtail benefits and reduce, rather than expand, the number of people eligible for the federal-state health program for the poor.

New work requirements have received most of the attention. This year, the administration has granted permission to Arizona and Ohio to impose work requirements of 80 hours a month for most able-bodied adults.

Since 2017, at least 15 states have either applied for or received permission to impose work requirements. But the changes go far beyond forcing Medicaid recipients to get jobs.

Armed with federal waivers allowing them to deviate from the normal Medicaid rules, states also have forced beneficiaries to pay premiums; “locked out” recipients who miss deadlines; stopped providing rides for medical appointments and eliminated retroactive coverage of new enrollees’ medical bills.

Ten states have received or asked for permission to impose premiums. And nine have or are seeking waivers to lock out beneficiaries for not paying premiums on time. 

Not since Republican President Ronald Reagan, who tried unsuccessfully to cap Medicaid and effectively end its entitlement status, has an administration pushed so hard to shrink the Medicaid rolls. During every subsequent administration—including Republican ones—the overall emphasis has been on extending coverage to more people.

“Generally, when you reduced in one area, you added in others,” said Thomas Scully, who led the U.S. Centers for Medicare and Medicaid Services during the Republican George W. Bush administration.

But Scully said the Trump administration is acting within the bounds of the law. “The [Health and Human Services] secretary’s authority is extremely broad,” he said. “It’s basically unfettered authority to do anything you want.”

Gail Wilensky, who directed Medicaid and Medicare from 1990 to 1992 under Republican President George H. W. Bush, agreed. “My view is you can push as hard as you can within the confines of the law,” she said, “and you can also do as little as you want within the confines of the law.”

To the Trump administration, getting people off the Medicaid rolls is the whole point.

In a letter to governors in March 2017, then-HHS Secretary Tom Price and CMS Administrator Seema Verma asserted that the Affordable Care Act’s expansion of Medicaid “to non-disabled, working age adults without dependent children was a clear departure from the core, historical mission of the program.” They promised to usher in “a new era” by giving states more control over the program.

Current HHS Secretary Alex Azar told Congress this month that the administration wants to get most able-bodied Medicaid recipients into the workforce, so they will no longer need Medicaid.

Former Trump health care adviser Nina Owcharenko Schaefer said the administration is simply allowing states to test their own ideas, a feature of Medicaid from its inception, in 1965.

“Like other administrations, this one recognizes that Medicaid is not a homogenous program that operates uniformly across state lines,” said Schaefer, who is now a health policy analyst at the conservative Heritage Foundation.

CMS did not respond to requests for comment other than referring to past statements by the agency.

But critics say the administration’s actions are unprecedented—and perhaps contrary to the intent of the Medicaid law. And opponents have challenged the work requirements and other waiver provisions in court.

A federal judge indicated at a hearing earlier this month that he will rule before April on lawsuits challenging the administration’s approval of waivers for Kentucky and Arkansas that include the imposition of work requirements and cuts in services. According to documents filed in the suit, the Kentucky requirement would cut 95,000 beneficiaries from the Medicaid rolls.

“This administration’s view of Medicaid is absolutely different and definitely contrary to congressional action,” Harvard health economist Benjamin Sommers said.

Vikki Wachino, who headed the Center for Medicaid and CHIP (Children’s Health Insurance Program) services in the Democratic Obama administration, said the Trump administration is deviating from previous ones by “taking coverages and services from people without any offsetting gain.”

A Federal-State Partnership

Congress created Medicaid as a jointly financed partnership between the federal and state governments to provide medical assistance to the poor. The federal government pays anywhere between 50 and 76 percent depending on a state’s per capita income, with the state paying the rest.

Medicaid at first served a limited population: the poor, children, their caretaker relatives, the blind and individuals with other disabilities. Over time, with federal approval, states were able to increase eligibility by raising qualifying income levels and making more categories of people eligible, such as pregnant women.

The Affordable Care Act of 2010 provided the largest expansion, providing for federal matching funds for coverage of childless adults with incomes up to 138 percent of the federal poverty line, or an average annual income for an individual of $12,140. (For the Medicaid expansion population, the federal government pays an even greater share, 93 percent.)

To date, 36 states and Washington, D.C., have expanded the program, according to an analysis by the Kaiser Family Foundation.

As of December, Medicaid covered about 65.9 million individuals, or about 1 in 5 people living in the United States.

Medicaid is governed by federal rules, but historically states have had the right to apply for exemptions from federal law to test innovations. Prior to the ACA, states mostly used those waivers to make more people eligible for the program or to switch from fee-for-service Medicaid plans to managed-care operations.

The HHS secretary has the authority to grant those waivers but only, according to federal statute, if the proposed changes are “likely to assist in promoting the objectives” of the Medicaid program, which is defined as providing health care to those “whose income and resources are insufficient to meet the costs of necessary medical services.”

But in their 2017 letter to governors, Price and Verma argued that “the best way to improve the long-term health of low income Americans is to empower them with skills and employment.”

They also said one purpose of waivers is to “align Medicaid and private insurance policies.”

Verma elaborated on that idea in a speech last fall to a conference on Medicaid managed care.

“The problem too often is that the most well-meaning government policies trap people in a hopeless cycle of poverty, making it too difficult to escape, and too easy to become more dependent,” she said.

“Instead, we ought to insist that the able-bodied participate in earning benefits.”

In its pending application to require beneficiaries to work, go to school or participate in job training, Alabama said the waiver would help able-bodied parent or caretaker relative recipients to improve their health outcomes and economic stability.

Critics say such assertions ignore data showing that among non-elderly adults receiving Medicaid, 8 out of 10 live in families in which someone in the household works, and the majority work themselves.

Similarly, in its approved application, Indiana said eliminating the requirement that it retroactively cover the medical bills of new beneficiaries would “educate members and prepare them to eventually participate in the private market.”

In its application on stopping payments for non-emergency medical transportation, Kentucky said eliminating those payments would be “consistent with the goal of offering a commercial health insurance market experience.”

But Leonardo Cuello, director of policy for the National Health Law Program, which represents plaintiffs in the Arkansas and Kentucky lawsuits, said that in attempting to roll back Medicaid eligibility, the administration is “revisiting an old refrain about the worthy poor.”

“Among lower income people, they believe there are people who are worthy of attention because they are elderly, or disabled or children, and it’s not their fault they are in this lot,” Cuello said. “Then, they think, there are the other people who are lazy, who don’t deserve the help.”

To be sure, the Trump administration has not been open to all of the new restrictions that states have proposed. Verma said last year she wouldn’t approve waivers, sought by Arizona, Kansas, Utah and other states, that would put time limits on how long beneficiaries could remain in Medicaid.

Court’s Ruling

In his preliminary ruling last June vacating HHS’ approval of Kentucky’s waiver application, U.S. District Judge for the District of Columbia James Boasberg characterized HHS’ reasons for approval as “little more than a sleight of hand.”

The central concern of Medicaid, he said, was covering health care costs, not helping low-income people achieve financial independence or better self-esteem, justifications HHS accepted from Kentucky.

States also have justified cuts in services for budgetary concerns. For example, Florida, in its 2018 application, said the waiver would have affected 39,000 recipients had it been in effect in 2016 but would have enhanced “fiscal predictability.”

Boasberg said such budgetary concerns could not be used to justify cutting services.

That position has been affirmed by the courts, said Jessica Schubel, a health policy analyst for the Center on Budget and Policy Priorities, a left-leaning think tank based in Washington, D.C.

“The courts have said quite firmly that saving money can’t be a primary objective,” she said.

Joseph Antos, a health policy analyst with the conservative American Enterprise Institute, agreed.

“Are they taking other steps outside of the Medicaid program to get people into jobs that would provide them with employer-sponsored health insurance?”

Antos said he was skeptical that such efforts were taking place.