Trump Wants States to Experiment With Medicaid—Up to a Point

This article originally appeared on Stateline, an initiative of the Pew Charitable Trusts.

After a series of zigzags, Utah is about to expand Medicaid under the Affordable Care Act. At least 10 red states have done the same, but Utah’s experience may be a bellwether showing how far the Trump administration will let states go in customizing Medicaid, the joint federal-state health care program for the poor.

Utah voters approved Medicaid expansion last November, by a 53% to 47% margin. But after the state’s Republican-dominated legislature convened in January, it scaled back the voter-approved measure. Instead of covering childless adults making up to 138% of the federal poverty level — the standard in the ACA and the ballot initiative — Utah lawmakers wanted to cover only those making up to 100% of the poverty level.

Legislators also wanted to add a work requirement — even though courts have thwarted that in other states. They wanted Utah to “lock out” beneficiaries who intentionally received services to which they weren’t entitled — and to allow state Medicaid officials to remove them without a court finding. And they wanted Utah to be able to cap enrollment if it ran into budget problems.

Though Utah needed federal waivers to make those modifications, it had reason for optimism: The Trump administration has heartily endorsed the idea of giving states maximum Medicaid flexibility.

But the mixed reaction of Trump’s Centers for Medicare and Medicaid Services to Utah’s plan has demonstrated that while the administration is open to breaking with precedent, it is not ready to embrace all of Utah’s proposals.

The denials surprised and disheartened Utah Republican lawmakers who sponsored the legislation.

“CMS was very encouraging,” said state Sen. Allen Christensen, chairman of the Senate Health and Human Services Interim Committee. “They said, ‘Think outside the box. Ask, ask, ask and it will be done.’”

State Rep. James Dunnigan, the Republican who managed the legislation on the House side, said he and his colleagues devised the bill’s provisions after consulting with the Trump administration. “We didn’t do this as a lark,” he said. “We had a number of conversations with CMS, and they indicated there would be a favorable reception.”

CMS did not respond to Stateline’s request for comment.

In April, CMS told Utah it could exclude childless adults making between 100% and 138% of the federal poverty level from its Medicaid expansion. But several months later, the agency clarified that if Utah did so, the federal government would not cover 90% of the new enrollees’ costs, the normal match rate for states that expand Medicaid under the ACA. Instead, it would cover only 68%, which is Utah’s regular Medicaid match rate.

CMS made clear that its denial wasn’t an indication of support for Medicaid expansion, a core feature of President Barack Obama’s ACA. In a statement over the summer, CMS expressed concern that if it granted the higher federal match rate to Utah’s partial Medicaid expansion, other non-expansion states might try to follow suit.

“Unfortunately,” CMS wrote in July, granting the higher rate for a partial expansion “would invite continued reliance on a broken and unsustainable Obamacare system.”

Late last month, Utah revealed it is amending its expansion plan to cover childless adults making up to 138% of the poverty level. But the amended proposal also would force some Medicaid enrollees to pay monthly premiums and copayments for some emergency room visits.

Utah got better news on its request for a work requirement. CMS granted that request, even though a federal judge has struck down similar requirements in Arkansas, Kentucky and New Hampshire.

Federal officials still haven’t reached a final decision on whether Utah will be allowed to cap Medicaid enrollment. That would be a momentous change, since until now Medicaid has been an entitlement program, open to anybody who qualifies. Both Christensen and Dunnigan said they doubt now that CMS will grant that request.

Utah also is waiting to hear about its lockout proposal, which would make it the first state with the authority to kick people out of the program for up to six months for committing “intentional program violations.”

Matt Salo, executive director of the National Association of Medicaid Directors, said other states have been closely watching the outcome of Utah’s proposals.

“People know this administration is willing to be very flexible when it comes to things like work requirements, but they’ve been waiting for direction on some other things,” Salo said. “It looks like Utah is helping provide some of the answers.”

Utah’s work requirement, premium and lockout provisions would apply only to the Medicaid expansion population, though the state has indicated it might try to extend them to all Medicaid enrollees if the administration approves them.

Christensen said legislators felt they had to scale back the measure voters had approved because even the sales tax increase it included wouldn’t have covered the costs of a full Medicaid expansion. The state’s Office of Management and Budget said full expansion eventually would have left the state nearly $65 million a year short.

“People can ask for all kinds of things at the ballot box,” he said, “but when it comes to paying for it, that’s another thing.”

Dunnigan said the current proposal does not include a cost-of-living increase for medical providers, which he said will save the state 30% of the ballot measure’s projected cost.

Utah’s original proposal to exclude childless adults making between 100% and 138% of poverty, or $12,490 and $17,236 a year, would have reduced the Medicaid expansion rolls by 40,000 people, according to the state.

Under its proposal, Utah would charge a monthly premium — $20 for individuals, $30 for couples — for people in the expansion population. Those enrollees also would be charged a $25 copayment for non-emergency visits to the emergency room.

Not all the state’s proposals would cost beneficiaries money or keep people off the rolls. Utah also is asking federal permission to allow 7,000 more people experiencing homelessness or receiving mental health or drug addiction treatment to remain in Medicaid for a full year even if their income at times exceeds the limit. The state also is seeking to provide housing assistance to those same groups through its Medicaid program.

But the health care advocates who spearheaded the ballot initiative last year say that on balance, Utah’s proposals would still deny care to people who desperately need it. They strongly oppose the enrollment cap, the lockout provision and the proposed premiums.

Jessie Mandle, a senior health policy analyst with Voices for Utah Children, said the limitations Utah seeks reflect a view that people in Medicaid are trying to get something they don’t deserve when the reality is they simply cannot afford to pay for the care that would keep them and their families healthy.

“These provisions contribute to this perception that there’s a stigma associated with being in Medicaid and that it is not a welcoming program,” she said.

Advocates also say the lockout provision would apply not just to people who intentionally make false claims about their eligibility, but also those who fail to promptly alert officials when a change to their family or income circumstances makes them ineligible for Medicaid. They also say the provision is unnecessary because there are criminal laws against Medicaid fraud.

The state estimates that the measure would affect about 750 people a year.

Courtney Bullard, education director for the Utah Health Policy Project, said she expects the state will have a hard time proving intentional violations. But Bullard fears people will be thrown out of Medicaid through no fault of their own. That is exactly what happened in Arkansas, she said, when that state implemented work requirements before the federal court ruling.

“We should be looking to pull more people into health care,” she said, “not putting up obstacles.”