Medicaid Expansion and Waivers: Two Possible Paths to Extending Health Coverage

Governor Brian Kemp is pursuing legislation that would allow the state to submit two types of waivers aimed at improving health care. The term “waiver” refers to a state opting out of certain requirements set by the federal health agency and trying new approaches to managing health care in the state. SB 106 – the Patients First Act – was introduced on February 13 and allows the state to submit:

1) A Medicaid 1115 waiver that could provide coverage to more low-income Georgians
2) A 1332 waiver that could help strengthen the private health insurance marketplace in the state

The 1332 waiver was created under the Affordable Care Act of 2010 and allows states to pursue innovative strategies that will strengthen their private health insurance marketplaces. Eight states have received approval for a 1332 waiver. Most of those states used the waivers to fund a reinsurance program, which helps lower health insurance premiums by covering part of the claims for enrollees with high health care costs. The 1332 waiver application process would be managed by the Governor and the Department of Insurance. A Medicaid 1115 waiver application would be managed by the Department of Community Health under a separate process. The 1332 waiver can be used in a number of different ways to make changes in the private health insurance marketplace. It is unclear right now how the state would use this waiver and if it would increase coverage. The following information will focus on the Medicaid 1115 waiver and how it can be used to insure more residents.

Increasing the Number of Insured Georgians

The 1115 Medicaid waiver or a straightforward Medicaid expansion are the two major paths that lawmakers can take to put health insurance cards in the pockets of more Georgians. An 1115 Medicaid waiver is a way for states to test out new approaches of implementing Medicaid that are likely to promote the program’s objectives. This waiver option has been available to states since the Medicaid program was created in 1965. Georgia currently operates an 1115 waiver program called Planning for Healthy Babies, which expands eligibility for family planning services covered by Medicaid.

The option to increase Medicaid eligibility was made available under the Affordable Care Act at no cost to states for the first two years (2014 to 2016) and phased into a 10 percent cost to states for 2020 and beyond. Some states have used Medicaid waivers to increase Medicaid eligibility and receive the higher federal matching rate, without taking up a straightforward Medicaid expansion. A Medicaid waiver can be an effective way to increase coverage and try out innovative approaches to delivering care. But when states have added provisions such as work reporting requirements, premiums and lock-out periods, the evaluations show that fewer people keep their coverage. As people lose coverage, interruption in care can lead to more expensive hospitalizations and higher uncompensated care costs for hospitals. Any plan to create a Medicaid waiver program in Georgia should consider this evidence base and ensure that the provisions do not restrict access to care.

The following chart outlines some of the major differences between a straightforward Medicaid expansion and a Medicaid 1115 waiver that increases eligibility for coverage.

Medicaid Expansion Medicaid 1115 Waiver
Who would be eligible for health coverage?
Georgia residents making less than 138% of the federal poverty line. (About $16,700 a year for an individual and $28,600 a year for a family of three) If the state wants to receive the higher federal match, the plan must cover people making less than 138% of the federal poverty line. Three states proposed a partial increase up to 100% of the federal poverty line ($12,100 a year for one and $20,700 for three) but this waiver was not approved.
How many people would be able to get health coverage?
About 470,000 Georgians would be eligible for coverage1. Participants would be able to stay enrolled throughout the year and would need to renew annually if they still meet the income requirements. About 470,000 Georgians would be eligible at a full increase to 138% of poverty. About 240,000 would be eligible at a partial increase to 100% of poverty. Waiver plans in some states resulted in people losing their coverage for reasons such as not being able to pay premiums or not reporting work hours. These provisions could result in a lower number of Georgians getting and staying covered.
How much would the federal government pay?
The federal government pays for 90% of the total costs for the newly eligible enrollees in the year 2020 and every year after that. This would bring in about $3 billion new federal dollars to the state each year for health care. The federal government pays for 90% of the costs in 2020 and beyond if the waiver increases eligibility to 138 percent of the federal poverty line. Any partial increase in eligibility would be paid for at Georgia’s current federal match, which is about 67%.
How much would the state pay?
The net cost to the state – after accounting for additional revenue and cost savings – is estimated to be about $140 million in the first year2. At a full increase to 138% of poverty, the cost could be similar to Medicaid expansion – unless specific measures end up changing the cost. For example, some states that required health savings accounts ended up spending more on administrative costs. There is not yet an official estimate for the cost of a partial increase. About 230,000 fewer people would be eligible, but the state would be paying more for each person because of the lower federal match. Utah’s proposed partial expansion would cost $50 million more to cover 48,000 fewer residents3.
How much would enrollees have to pay for coverage and services?
Enrollees would have the same cost-sharing requirements of the current Medicaid program. This includes no premiums, no deductibles, and some small co-payments for some members on specific services. Enrollees may have the same cost-sharing requirements as traditional Medicaid or a state can choose to charge premiums and deductibles. Some states have required enrollees to contribute to a health savings account with a state match to cover the deductible.
What benefits would be included?
Enrollees would receive at least the current benefits package for Medicaid. Some of these benefits include doctor’s office visits, nursing home care, maternity and newborn care, mental health and substance abuse treatment and transportation to medical appointments. The state can keep, add or remove some specific benefits provided to the newly enrolled population. Indiana’s waiver removed benefits for some enrollees such as transportation to appointments, dental care and vision care. West Virginia added new benefits for treating substance use disorders.
What type of health coverage is provided?
New enrollees would enroll in one of the state’s managed care plans. Georgia currently pays private organizations to administer health benefits and manage the care for enrollees. New enrollees could enroll in one of the state’s managed care plans or the state can choose to pay the premiums for the participant to enroll in a private health insurance plan.
What is the process for approving the plan?
The state health agency would make a change to the Medicaid State Plan, which provides the details for each state’s Medicaid program. The changes are sent to the federal Medicaid agency and are reviewed within 90 days. Approved changes do not expire, but can be changed in future amendments.

Louisiana, Ohio and West Virginia are among the 29 states and D.C. that used or passed a measure to use a state plan amendment to cover more residents.

The state health agency would request to waive certain federal requirements by submitting the waiver plan to the federal Medicaid agency. There must be a 30-day public comment period before submission and a 30-day public comment period after submission. Approval is typically for three to five years and can be renewed.

Kentucky, Indiana and Arkansas are among the 8 states that received waiver approval to cover more residents.

 


1Kaiser Family Foundation.” The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid.” June 2018.

2Governor’s Office of Planning and Budget and Department of Audits and Accounts. Fiscal Note: House Bill (LC 46 0015). January 18, 2019.

3Would Cover Fewer People, Create New Financial Risks.” February 2019.

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