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NAMD Director Points To CMS’ Balancing Act In Medicaid Expansion Policy

  • December 11, 2012

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    As long as the Obama administration views states’ assertions that they will not expand Medicaid as saber rattling — similar to certain states’ negative reaction to stimulus funds that were ultimately accepted — the administration has no reason to allow for a partial expansion up to 100 percent of the federal poverty line, National Association of Medicaid Directors Executive Director Matt Salo said Monday. Both Salo and a former CMS chief said that CMS likely is counting on states to phase in a full expansion, but Salo also noted that HHS has yet to publicly rule out partial expansion.

    At this point the administration gains little benefit by allowing for anything but a full Medicaid expansion as written in the Affordable Care Act, Salo said, and from a political standpoint, ideological standpoint and operational standpoint has no interest in allowing for a partial expansion.

    If the administration believes that every state will eventually move toward the Medicaid expansion, it won’t open the door to 50 potential waiver negotiations, Salo said. The administration could adopt the position that it assumes states that do not expand now will do so in the future, Salo said.

    “Why negotiate against yourself if you think that you’re going to win?” Salo said, speaking at the American Bar Association’s health conference Monday (Dec. 3).

    But he also said the administration may have a tipping point. Though it is impossible to know exactly where the tipping point would be, if enough states refuse to expand Medicaid by a certain point in time, the administration could decide to come to the table for “half a loaf” because of the fact that much of the ACA’s increased coverage for the uninsured depends on Medicaid, Salo said.

    The dynamic between the states and CMS over the next few months — or longer — will be fascinating to watch as these groups come closer to a decision over the potential for a partial expansion, Salo added. States that have already said they will not expand their Medicaid programs include Texas, Oklahoma, Mississippi, Maine, South Carolina, Georgia, Louisiana and Alabama.

    Former CMS Administrator and Brookings Fellow Mark McClellan told the ABA audience Tuesday (Dec. 4) he thinks the most likely scenario is an extended phase-in either through legislative action or administrative action driven by how the states interact with the federal government. There are going to be a lot of states that don’t do the Medicaid expansions on schedule in 2014, McClellan said, or if they do commit to the expansion it will be more on paper, without the expansive outreach program or plan set up for the practical aspects of the expansion.

    It will be very important for the administration to set the expectations for the expansion correctly and to have some steps in place to help states that are struggling, he said. Having some successful states to point to will also be important, he added, as historically some states expanded Medicaid successfully and over time other states followed suit. McClellan suggested California, Oregon or Washington could be held up as examples to show how an expansion could be done.

    Many states have wondered whether it would be possible to expand their Medicaid programs to 100 percent of the federal poverty level, instead of 133 percent, because the ACA’s private insurance subsidies are available starting at 100 percent, so those individuals could try to purchase subsidized private coverage in the exchanges.

    CMS is working on a response to states’ questions about whether a partial expansion of the program to less than 133 would be allowed, but has not hinted what the response will be, according to a state source (see related story). During a conference call with reporters in November, HHS spokesperson Erin Shields said the department was reviewing questions about partial Medicaid expansion and whether it was even an option.

    Many lawyers have said that the Obama administration does not have the authority under the ACA to allow for a partial expansion of the Medicaid program, and that the law only allows for states to take the full expansion or nothing. Former New York Medicaid Director Deborah Bachrach, currently with Manatt, Phelps and Phillips, has said it will be hard for CMS to allow a state to expand to less than 133 percent and still receive a full matching rate, saying the law most likely will be read as allowing for an all-or-nothing approach.

    Salo also said that although states have the option to sunset the increased coverage at any time, as a practical matter that won’t happen. Medicaid’s history is one of expansion, Salo said, not to mention the political consequences of scaling back coverage. — Michelle M. Stein (