State Medicaid Expansion Plans: 2015 Recap and 2016 Possibilities

As 2015 comes to a close, Medicaid expansion activity in states has not slowed down. Currently, 30 states and the District of Columbia have expanded Medicaid, and six of these states have chosen to pursue waivers to implement alternative versions of expansion. As the new year approaches, a number of additional states are considering options for expanding Medicaid—either as outlined by the ACA or through waivers—and other states are planning to propose modifications to their existing expansion models. The following selected state snapshots provide a summary of key highlights from 2015 Medicaid expansion activity and what to watch for in the coming year.

States to Watch in 2016
Alabama: In early 2015, Governor Bentley indicated that his office might consider an “Alabama-specific” version of Medicaid expansion, and his administration is in the process of examining options and continuing communication with federal officials. A governor-appointed task force recommended that state policymakers should find a way to provide health coverage to uninsured individuals, and the task force’s statement outlined the benefits of closing the state’s coverage gap. Whether there will be support from the state legislature is a question.

Kentucky: While former Governor Beshear implemented the Medicaid expansion as defined by the ACA, newly sworn in Governor Bevin has signaled interest in making changes. During his campaign Governor Bevin indicated that he would end the state’s Medicaid expansion if elected, yet more recently Bevin suggested that Kentucky may pursue a waiver to modify the current traditional expansion into a model similar to Indiana’s. A recent Kaiser Family Foundation poll found that approximately seven in 10 Kentucky residents would prefer to maintain Medicaid expansion as is rather than implement changes that would cover fewer individuals.

Louisiana: While Governor Jindal has remained staunchly against Medicaid expansion, incoming Governor-elect John Bel Edwards has expressed strong support for expansion. In June 2015, the legislature passed a bill containing a financing tool to cover the state’s costs for expansion through the pooling of hospital funds. Additionally, in December state legislators requested the Department of Health and Hospitals to update previous 2013 and 2014 reports on Medicaid expansion options by early January.

South Dakota: Previously Governor Daugaard sought approval for a partial expansion of Medicaid for individuals at or below the federal poverty line (FPL), but federal officials denied this request. In the fall of 2015, the state restarted discussions with federal administrators about expansion options. The state is seeking greater federal reimbursement for Medicaid services provided through Indian Health Services, which would increase funding in the state budget that could be made available to support state expansion costs. In his December budget address the governor indicated support for expanding Medicaid if costs can be covered by the general fund budget.

Utah: Earlier in 2015 it appeared that Utah was close to implementing expansion—in December 2014 Governor Herbert proposed an alternative expansion model, the Healthy Utah Plan, and while this did not gain full legislative approval, a resolution was passed directing state leaders to seek a compromise. However the revised Utah Access Plus proposal was rejected by state legislators in October. In December 2015, the governor’s office indicated that the executive branch does not intend to propose another Medicaid expansion plan and any next steps will be dependent on legislative action. State legislators may consider expansion in 2016, but there are some indications that the legislature may hold off until the presidential election is decided.

Wyoming: At the end of 2014, Governor Mead and the state’s Department of Health released a Medicaid expansion plan, which included premiums and co-payments that could be reduced through healthy behavior activities, as well as a work assistance program. Legislation aligned with the plan was introduced in 2015, but voted down. The governor just released a two-year budget request that includes Medicaid expansion, contending that federal expansion dollars will help the state address budget shortfalls. However some indications are that the majority of state legislators will remain opposed to implementing expansion.

States Seeking Expansion Modifications
A number of states that previously expanded Medicaid are seeking modifications that put requirements on enrollees similar to Indiana’s expansion model, such as premiums and additional cost sharing payments that can be reduced through participation in healthy behavior activities. Arizona is proposing cost sharing above federal thresholds, time limits on coverage, as well as work requirements. However CMS has not approved waivers seeking to include cost sharing above amounts permitted by federal law (one exception being approval for Indiana to charge cost sharing above federal limits for non-emergency use of the ER). CMS has also not approved time limits on coverage and has previously denied waiver requests to condition Medicaid eligibility on work requirements.

 Arizona: While Arizona is currently implementing the ACA’s traditional Medicaid expansion, Governor Ducey took office in January 2015 and is seeking a federal waiver to pursue the proposed AHCCCS CARE plan. The plan includes health savings accounts and would require enrollees to pay premiums and co-payments that could be reduced through healthy behavior activities. Similar to Indiana’s approved waiver, the waiver seeks to implement cost sharing above federal limits for non-emergency use of the ER and proposes to disenroll and impose a lock out period for individuals above 100 percent FPL for non-payment of required cost sharing. However, the state is also seeking to implement elements not seen in other waivers, such as requirements that enrollees must be working, attending school, a training program, or actively seeking employment; and limiting lifetime enrollment in the program for able-bodied adults to five years.

Arkansas: The Arkansas Health Care Independence Program, also know as the “Private Option”, was the first Medicaid expansion waiver approved under the ACA, which uses Medicaid funds as premium assistance to provide coverage for newly eligible adults through qualified health plans (QHPs). The state later sought, and was granted, a waiver amendment allowing the creation of health savings accounts, which enrollees pay into to cover co-payments. In early 2015 newly sworn in Republican Governor Hutchinson created a legislative task force to provide recommendations on the future of the state’s expansion model. In December the state announced plans to submit a waiver amendment to continue the program past its current end date of December 2016, which may include changes the task force is considering, such as enhanced cost sharing, a work referral program, and measures to promote employer-sponsored insurance. The governor also recently suggested adding an asset test and lifetime benefit limits to the Private Option, and in December the task force endorsed the governor’s plan to seek changes to the waiver.

Iowa: In 2014 the state expanded Medicaid through the Iowa Health and Wellness Plan, enrolling newly eligible adults with incomes above 100 percent FPL in exchange coverage using Medicaid funds as premium assistance, and providing Medicaid managed care plan coverage for lower-income and medically frail individuals. Both groups have income-based premiums that can be reduced if certain healthy behavior standards are met. However, in late 2014, one of the two participating QHPs withdrew from the exchange, and soon after, the other plan indicated it would no longer accept new Medicaid members. With a lack of QHP options, coverage through the premium assistance model became voluntary. Consequently in September 2015 Iowa submitted a waiver amendment to require all individuals eligible for the expansion to be enrolled in Medicaid managed care plans beginning in 2016.

Ohio: The state has implemented the traditional ACA Medicaid expansion, but the FY2016-FY2017 budget bill HB 64 proposed the Healthy Ohio program, which would require certain Medicaid recipients to contribute to state-run health savings accounts to cover care costs. Governor Kasich signed the budget bill into law in June. The plan to make changes to the existing expansion will require federal approval.

Other Notable State Updates from 2015
Alaska: Soon after taking office in December 2014, Governor Walker and the Department of Health and Social Services released a concept for expanding and reforming Medicaid through the Healthy Alaska Plan. The majority of state legislators were strongly opposed to expansion and legislation did not move forward despite two special sessions. In July 2015 the governor announced his plans to expand Medicaid using executive authority, even though the legislature restricted the executive branch’s authority to expand Medicaid (deemed unconstitutional by some legal analyses). In August the state legislature indicated that it plans to sue the governor for expanding without legislative approval. However the Alaska Supreme Court ruled that despite the ongoing lawsuit, expansion could move forward and individuals began enrolling in September.

Michigan: The state’s original Medicaid expansion waiver that was effective in April 2014, the Healthy Michigan Plan, requires all newly eligible adults to contribute to health savings accounts that are used for required co-payments. Individuals with incomes above 100 percent FPL also are required to make monthly premium contributions, which can be reduced through participation in certain healthy behavior activities. However state law authorizing the expansion required Michigan to submit a waiver amendment, which CMS approved last week (required to prevent the expansion from ending in April 2016). Under the waiver amendment’s special terms and conditions, in April 2018, non-medically frail beneficiaries with incomes above 100 percent FPL will choose to either move to a marketplace option or remain in the Medicaid delivery system. Premiums for both groups cannot exceed two percent of income, and failing to make contributions is not a condition of eligibility for those who must pay premiums. Total cost sharing must follow federal Medicaid rules (the waiver amendment had proposed total cost sharing up to seven percent of income). Individuals who stay in the Medicaid delivery system will be required to engage in certain healthy behaviors that can reduce cost sharing. The state will revise its health behavior protocols in 2017.

Montana: Governor Bullock’s FY2016-17 budget included expansion through the Healthy Montana Plan. While the legislature did not pass the governor’s plan as proposed in legislation, it did pass the HELP Act, which was signed by the governor in April 2015. In September the state submitted a waiver to implement the HELP program, which includes co-payments and premiums, with disenrollment for individuals above poverty for nonpayment after a grace period (re-enrollment can occur relatively soon after certain conditions are met). CMS approved the waiver in November, and coverage for enrollees will be effective in January 2016.

Pennsylvania: When Governor Wolf took office in January 2015, the state had just expanded Medicaid through a waiver for the Healthy PA plan implemented under the previous administration. The plan had included some of the same elements found in other expansion waivers, such as premiums that could be reduced through participation in healthy behavior activities and cost sharing. As promised during his campaign, Governor Wolf transitioned Pennsylvania’s waiver to a traditional Medicaid expansion program, HealthChoices, with coverage effective in September.