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The ACA and Medicaid Expansion Waivers « » The Henry J. Kaiser Family Foundation

The ACA and Medicaid Expansion Waivers

Under the Affordable Care Act (ACA), Medicaid plays a key role in efforts to reduce the number of uninsured by expanding eligibility to nearly all low income adults with incomes at or below 138% FPL ($16,242 per year for an individual in 2015); however, the Supreme Court ruling on the ACA’s constitutionality effectively made the expansion a state option. As of February 2015, 29 states including DC are implementing the expansion. Nearly all states (24 of 29) are implementing the expansion as set forth by law, but a limited number of states have obtained or are seeking approval through Section 1115 waivers to implement the expansion in ways that extend beyond the flexibility provided by the law. More states are discussing alternative models through waivers as a politically viable way to implement expansion in order to extend coverage and capture federal dollars.

This brief provides an overview of the role of Section 1115 waivers in expanding coverage since the enactment of the ACA.  The brief also highlights key themes in these waivers including implementing the Medicaid expansion through a premium assistance model, charging premiums, eliminating certain required benefits (most notably non-emergency medical transportation), and using healthy behavior incentives as well as provisions that CMS has not approved.

To date, five states have received approval of a Section 1115 waiver to implement the Medicaid expansion (Arkansas, Iowa, Michigan, Pennsylvania and most recently Indiana). These waivers allow the states to implement the Medicaid expansion in ways that do not meet federal rules and still access enhanced federal matching funds for newly eligible adults. Under the ACA, the federal government will pay 100% of the costs of those newly eligible for 2014-2016 and then the federal share phases down to 90% in 2020 and beyond.  While the waivers are each unique, they include some common provisions such as implementing the Medicaid expansion through a premium assistance model, charging premiums, eliminating certain required benefits (most notably non-emergency medical transportation), and using healthy behavior incentives. The Pennsylvania waiver was approved under Governor Corbett, but the current Governor Wolf announced that Pennsylvania will transition to a traditional Medicaid expansion plan and he will not implement the benefit and work changes that the previous Governor had initiated.

The most recent waiver approval in Indiana includes provisions that had not been approved in other states.  These new provisions include allowing the state not to provide retroactive eligibility; to make coverage effective beginning on the date of the first premium payment, rather than on the date of application; and to bar certain expansion adults from re-enrolling in coverage for six months if they are dis-enrolled for unpaid premiums.  In addition, under separate waiver authority (§1916(f)), Indiana received approval to charge higher cost sharing for non-emergency use of the emergency room than otherwise allowed under federal rules (Table 1).

Several states have waiver proposals pending or in development.  There is no deadline for states to participate in the Medicaid expansion and moving into the legislative sessions for 2015, other states continue to explore opportunities to implement the Medicaid expansion. Governors in both Tennessee and Utah have been negotiating plans with CMS, but these plans also need to be approved by the state legislature. In a special session in early February, the legislature in Tennessee rejected the Governor’s expansion plan. In Utah, a legislative taskforce did not endorse the Governor’s plan but legislative debate continues.  The Wyoming Department of Health published its recommendation for an alternative Medicaid Expansion plan, called the SHARE plan, in November 2014; however, the state Senate voted against the plan in early February 2015. New Hampshire, a state that had implemented the expansion, also has a waiver pending with CMS to continue the expansion through a premium assistance model.

Table 1:  Key Themes in ACA Expansion Waivers and Proposals
Premium Assistance Premiums / Monthly Contributions Healthy Behavior Incentives Benefits Work Referral Co-Payments* Waivers of Retroactive Eligibility / Reasonable Promptness
Approved Waivers
Arkansas1 Mandatory for QHPs X
Iowa Optional for QHPs X X X
Indiana2 Optional for ESI X X X X X
Michigan X X
Pennsylvania3 X X X
Waiver Proposals
New Hampshire4 Mandatory for QHPs X X
Tennessee5 Optional for ESI X X X X X
Utah5 Mandatory for QHPs and ESI X X X X
*Cost-sharing waivers were approved in Indiana and are proposed in Tennessee and Utah through §1916(f) not §1115 waiver authority.

1 The monthly contributions in AR are in lieu of cost-sharing requirements.

2Indiana may administer a voluntary state-run work search and job training program, which is separate from the Medicaid waiver.

3 The Pennsylvania expansion waiver was approved under Governor Corbett who also had intended to restrict benefits through a SPA and to implement a state-only work-referral program.  Governor Wolf (the new governor) announced that PA will transition to a traditional Medicaid expansion plan and will not implement the benefit and work changes.

4 New Hampshire implemented the Medicaid expansion through a SPA, but has a waiver pending to move to a mandatory Marketplace premium assistance model by 1/2016.

5The Governors in Utah and Tennessee have waiver proposals that have not been officially submitted to CMS and are under debate in the state legislatures.

CMS has denied a number of provisions included in Section 1115 Waiver proposals.  Provisions that CMS had denied waiver authority for include:

  • Premiums for individuals with incomes < 100% FPL as a condition of eligibility;
  • Requirements to provide wrap-around benefits for EPSDT and free choice of family planning provider to the extent that Marketplace plans do not offer coverage for these services; and
  • Work requirements as a condition of Medicaid eligibility.

To ensure Section 1115 waivers fulfill their purpose as research and demonstrations projects, it will be important to evaluate their effects.  Waivers are intended to be research and demonstration projects, and federal law requires that they be formally evaluated to measure how well they achieve objectives including the effects on access to care and outcomes for beneficiaries. Particularly as waiver designs become increasingly more complex, the evaluations will help inform policy makers if such policies can be effectively administered and if beneficiaries understand the policies. Ensuring that evaluations are timely and that findings are publicly available will be important for enabling researchers, policymakers, and other stakeholders to identify and examine lessons learned from these waiver experiences.

What happens with waivers between 2014 and 2016 also will be important to inform the use of the new state innovation waiver authority (Section 1332) available in 2017, which will allow states to waive Marketplace coverage provisions and combine those waivers with Medicaid and CHIP waivers.  As more states seek waivers to implement the expansion, what we learn from their experiences will help inform the future direction of coverage for low-income adults and families.  In addition, in states where Medicaid expansion without a waiver is not politically viable, large numbers of people are likely to remain without coverage. CMS, states, and other stakeholders will continue to navigate the balance between state waiver requests in an effort to reduce the number of uninsured adults while preserving key beneficiary protections and requirements in the Medicaid program.

Issue Brief