Waiver Wrap-Up
Two quick hits on the state waiver program proposed by the President yesterday, followed by a summary of stories in major dailies this morning regarding the announcement:
Medicaid Exempt from Waiver Program? Administration officials claimed yesterday that the waiver program would “allow…states to move some of their Medicaid-eligible populations into the exchange.” However, the text of the state waiver program does not appear to address Medicaid at all. Section 1332(a)(2) of the law (page 98) lists the statutory requirements that the Secretary can waive under the innovation program:
(2) REQUIREMENTS.—The requirements described in this paragraph with respect to health insurance coverage within the State for plan years beginning on or after January 1, 2014, are as follows:
(A) Part I of subtitle D. [Essential health benefits package – but ONLY IF the coverage to be provided is “at least as comprehensive” as the essential benefits package propounded by the Secretary in rulemaking]
(B) Part II of subtitle D. [Requirements for Exchanges]
(C) Section 1402. [Cost-sharing subsidies in Exchanges]
(D) Sections 36B [Exchange subsidies], 4980H [Employer mandate], and 5000A [Individual mandate] of the Internal Revenue Code of 1986.
In other words, there is NOTHING in the waiver program that would allow states to opt-out of the new Medicaid mandate created in Section 2001 of the bill, release states from the unfunded mandates created by same, or allow low-income individuals to receive coverage other than that provided by Medicaid. To be sure, it is possible that other sections of the law could be used to allow states to enroll their low-income Medicaid beneficiaries in Exchange coverage. But given that the waiver section of the statute explicitly excludes the Medicaid mandate as a requirement from which states can receive an exemption, it appears implausible for the Administration to claim that the waiver program would grant states ANY flexibility in managing their Medicaid populations. (It’s also worth why asking Democrats’ health care law was drafted so that low-income Medicaid beneficiaries can’t participate in the state-based approaches under the innovation waiver program.)
Double-Standards on Block Grants? Section 1332(a)(3) of the statute provides states participating in the waiver program the opportunity to receive a “pass through” of funding – in other words, states can receive the aggregate amount of insurance subsidies their eligible populations would have received had they been enrolled in Exchanges, and devote that funding to other coverage expansions. For this reason the New York Times called the waiver concept a “block grant.” But yet coming out of yesterday’s White House meeting, Administration officials “douse[d] cold water on the idea” of a block grant for Medicaid.
Likewise, the Center for Budget and Policy Priorities (CBPP) last week published a paper criticizing a proposed Medicaid block grant as saying it would provide “inadequate federal funding” of Medicaid, because federal spending on the program would only be allowed to grow at the rate of economic (i.e., GDP) growth plus one percent. Yet Section 3403 (page 413) of the health care law creates the EXACT SAME growth level for Medicare – GDP plus one percent.
All this raises obvious questions:
- Why does the Administration support a block grant for Exchange subsidies but not for Medicaid?
- Why does CBPP believe a GDP plus one percent growth level will provide “inadequate federal funding” for Medicaid but not Medicare?
- Do these positions have something to do with the fact that Republican governors are the ones arguing for a Medicaid block grant?
- Or is this inflexibility – to say nothing of potential hypocrisy – on Medicaid based on the belief that governors should not be allowed to innovate without meeting top-down, Washington-imposed standards?
Summary of Reactions to the President’s Waiver Proposal
Associated Press: “[The President’s proposal] would be no change to the fundamental requirements of a federal law that has divided the nation and prompted about half the states to try to overturn it through lawsuits….‘I was disappointed,’ said Texas Gov. Rick Perry, chairman of the Republican Governors Association. ‘Pretty much all he did was reset the clock on what many of us consider a ticking time bomb’ that could ‘crush our budgets’….The closer Republicans look at the details, the less flexibility they will see, said economist Douglas Holtz-Eakin, leading domestic policy adviser to 2008 GOP presidential candidate John McCain. ‘If you can’t control eligibility or the benefits package, it’s like saying: “Here’s the bill, you go figure out how to pay for it,”’ he said….For his part, Obama showed no give on the law’s core elements. He said was convinced the law would cut costs, end insurance industry abuses and ‘cover everybody.’”
New York Times: “Political calculations, as much as policy ones, were at work in the President’s announcement….While some Republican governors praised Mr. Obama for reaching out, they said the move did not address their underlying discomfort with the law or the major structural flaws facing state budgets….Many [Democrats] are convinced that it is not possible to expand health care coverage and achieve deficit reductions without the federal mandate….At the same time, the mandate, and the health care law more generally, is sure to be an issue in the President’s 2012 re-election campaign, which may be a reason he is offering the proposal now. ‘It’s to his advantage to show that he wants to be more moderate on this…because the mandate is terribly unpopular politically and he doesn’t want to be saddled with that going into the next election.’”
Washington Post: “President Obama sought to defuse criticism of the new health care overhaul Monday by saying he is willing to give states an earlier opportunity to opt out of certain key requirements – but only if they can find their own ways to accomplish the law’s goals….Governors’ more immediate focus was on the potentially crushing burden of rising Medicaid costs….New Jersey Gov. Chris Christie said that on the question of Medicaid flexibility, the President ‘said some very nice things and he says them really nicely.’ But, he added, ‘I didn’t hear any real substance’ that would suggest the governors will get what they want….[Former HHS Secretary] Mike Leavitt…called Obama’s announcement ‘sort of a hollow victory,’ [claiming that] Obama was essentially telling states, ‘“We’ll give you permission to ask for permission sooner rather than later.” What Republicans are saying is that we don’t want to have to ask for permission at all, because we can’t afford to build the system that you’ve laid out for us.’”
Wall Street Journal: “Few states are expected to seek the health-law waivers, and the move did little to appease elected Republicans, who are overwhelmingly opposed to the law. ‘That doesn’t help us any,’ said South Carolina Gov. Nikki Haley, a Republican. ‘They’d do us a favor if they let us opt out’ of the entire law….Vermont Gov. Peter Shumlin, a Democrat, said the change would make it easier for his state to develop a ‘single-payer’ plan, under which the state would be the central funder of health care.”