Medicaid Flexibility for States Called Easiest Way to Alter Obamacare

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By Sara Hansard

Give states more flexibility to implement Medicaid with additional initial funding.

That was the advice of former Congressional Budget Office official Joseph Antos, who spoke Jan. 31 at a packed forum on Affordable Care Act repeal and replacement options. Reducing Medicaid funding will be “very difficult for Republicans” because many congressional Republicans are from states that expanded Medicaid under the ACA, former Senate aide G. William Hoagland said.

President Donald Trump repeatedly pledged to provide health insurance for everyone. Congressional Republicans are grappling with plans to keep the coverage gains of 20 million people under the ACA while loosening the law’s regulatory restrictions and not substantially increasing the federal deficit.

Medicaid Expansion in Some States

It would be difficult for a Republican president to tell Republican governors who expanded their state Medicaid programs under the ACA that federal funds promised for the expansion would be cut off, said Antos, a scholar in health care and retirement policy at the conservative American Enterprise Institute. The ACA provided for enhanced funding to the states that expanded their Medicaid coverage to those earning 138 percent of the federal poverty level; that funding tapers down to 90 percent by 2020.

Thirty-one states plus the District of Columbia have adopted the expanded program.

“However, it’s not that hard over a period of time to make a deal” with Republican governors, Antos said. The enhanced match for the Medicaid expansion is likely to “taper down over a period of years,” and federal matching funds for Medicaid will return to the level for the traditional, pre-ACA Medicaid program, he said.

Hoagland, senior vice president of the Bipartisan Policy Center, also said “it will be very difficult to make any changes in Medicaid” by reducing funds through block grants. About 100 Republican House members and about 20 Republican senators represent states that expanded Medicaid.

Verma Likely to Offer More Flexibility

Trump’s nominee for administrator of the Centers for Medicare & Medicaid Services, Seema Verma, is likely to give states greater flexibility in implementing Medicaid, Antos said. Verma worked with now-Vice President Mike Pence when he was governor of Indiana to create a Medicaid plan that required low-income beneficiaries to make some payments to participate.

“That might in fact be the soft way for Republicans to address the block grant debate, rather than try to fight it through Congress, which I think might well be a losing battle,” Antos said. But if there’s more flexibility for states and “there’s a little bit more money on the table up front,” that could result in states making changes to their Medicaid programs, he said.

“A key element would be states in essence volunteering for whatever happens,” Antos said. House and Senate leaders sent letters to state governors “almost immediately” upon being seated in the new Congress asking for their views on health-care changes, he said.

`Governors Are Not Magicians.’

“But governors are not magicians,” said Chris Jennings, who was a health-care adviser to both President Bill Clinton and President Barack Obama. “You can give them all the flexibility in the world,” but if funds are cut, it would result in reducing benefits or coverage, he said. Jennings is president of health-care consulting firm Jennings Policy Strategies.

Reducing health-care costs is essential, Avik Roy said. Roy is president of a think tank that conducts research on expanding opportunities to low-income people. Roy said his group, the Foundation for Research on Equal Opportunity, published a plan that would cover 12 million more people than the ACA has covered but reduce federal spending by $10 trillion over three decades by reducing costs.

“You have a congressional Republican party which has accepted the premise that more coverage means more government, and we’re against that,” Roy said. “So a lot of the plans out there on the Republican side of Congress would cover substantially fewer people than the ACA. And you have a president who said no, my plan will provide insurance for everybody.”

Some elements of the ACA are good public policy but weren’t good politics, University of Chicago Professor Harold Pollack said. “The marketplaces are not a particularly good consumer experience for people who make over about 250 percent of the poverty level,” he said. This is because of the lack of generous subsidies for coverage.

Providing more generous subsidies and automatically enrolling people would improve the risk pool by getting healthier, lower-cost people covered, Pollack said. “One way or another, younger and healthier people have to be in the pool, or we have to have public money subsidizing people who are older and sicker,” he said.

To contact the reporter on this story: Sara Hansard in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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