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February 03, 2014 3:50 PM Medicaid Waiver Door Closing?

By Ed Kilgore

As anyone closely watching the battle over Medicaid expansion is aware, HHS has been holding out the lure of granting waivers to states who are willing to expand eligibility in exchange for their own ideas of “reform” of the program. Arkansas was the first in line, basically securing a 100% federal subsidy for privatizing Medicaid’s insurance offerings, making it a “premium support” system similar to the Obamcare exchanges. This wasn’t terribly earth-shaking, since Medicaid had been approving waivers for use of private managed care companies for decades. Then Iowa secured a waiver that allowed for an expansion accompanied by increased cost-sharing for beneficiaries, which is contrary to Medicaid’s history of free services for people who qualify. Pennsylvania has been seeking a similar waiver.

This trend led some of us to fear that the optional Medicaid expansion could turn into a free-for-all where Republicans get the feds to pay for all their health care policy pet rocks. So I am pleased to be reminded by Stateline’s Michael Ollove that HHS’s waiver capacity is limited:

In granting Iowa and Arkansas their recent waivers, HHS indicated that it would be friendly to similar proposals from other states, but only a limited number of them. In part, Salo said he suspects that is because of HHS lack of capacity to handle many waiver requests at once. “I don’t think HHS has the physical bandwidth to negotiate with 50 different states over 50 different Medicaid programs,” he said.
“The waiver process is cumbersome, and it is difficult and it is time-consuming,” said Vern Smith, the one-time director of Michigan’s Medicaid program who is now a principal manager with Health Management Associates, a health policy consulting and research firm. The process usually takes months, sometimes longer. It is mainly a process of negotiation between the state and HHS.

So the capacity is there to drag a few more Republican-governed states across the line into a Medicaid expansion largely on their own terms (aside from Pennsylvania, Utah is a possibility).. But at least until we see what happens in Arkansas (where the expansion could actually be clawed back any day now thanks to a Republican special election victory in the legislate) and Iowa, there’s not going to be any wholesale change in the Medicaid program other than additional expansions (e.g., Virgina now that it has a Democratic governor) so long as Barack Obama is president. And if there is a Republican president, Medicaid advocates have a lot more to worry about than generous waivers accompanying expansion.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

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