Medicaid and Merit: Forever Renegotiating

Nov 29, 2017 | Christopher F. Koller, President

Who should the Medicaid program serve? And who decides? These questions have been implicit through much of 2017, as we endured a remarkably uninformed “repeal and replace” debate in Congress. The November announcement by the Centers for Medicare and Medicaid Services (CMS) of new policies for section 1115 waiver consideration and review tees them up again.

The answers are subject to interpretation and turn a great deal on what one thinks of personal merit.

Federal law is of limited use in answering these questions. Congress has repeatedly changed the purpose of Medicaid since its inception in 1965 as “a medical assistance supplement for people receiving cash welfare assistance—the poorest families with dependent children, and poor aged, blind, and disabled individuals,” making it possible for states to finance care for more individuals by continually expanding the definition of populations eligible for Medicaid.

So does Congress set the guardrails for Medicaid—mainly in terms of the maximum income levels, family status, and disability status—and the states define who Medicaid serves? Not exactly. Congress has made its preferences known by creating different federal matching rates for different populations. More significantly, the fact that the Center for Medicaid and CHIP Services (CMCS) has to approve state proposals for how these populations are covered means the states and the current federal administration are forever renegotiating Medicaid’s purpose.

One way the federal government makes its views known about who Medicaid should serve, Sara Rosenbaum points out, is by how they define the objectives of the program, which were changed by the Trump administration. In announcing the new section 1115 waiver review policy, CMCS lists six objectives:

  1. “Improve access to high-quality, person-centered services that produce positive health outcomes for individuals;
  2. Promote efficiencies that ensure Medicaid’s sustainability for beneficiaries over the long term;
  3. Support coordinated strategies to address certain health determinants that promote upward mobility, greater independence, and improved quality of life among individuals;
  4. Strengthen beneficiary engagement in their personal health care plan, including incentive structures that promote responsible decision making;
  5. Enhance alignment between Medicaid policies and commercial health insurance products to facilitate smoother beneficiary transition; and
  6. Advance innovative delivery system and payment models to strengthen provider network capacity and drive greater value for Medicaid.”

Compare these to the objectives for Medicaid as set forth by the previous administration:

  1. “To increase and strengthen overall coverage of low-income individuals in the state.
  2. To increase access to, stabilize, and strengthen providers and provider networks available to serve Medicaid and low-income populations.
  3. To improve health outcomes for Medicaid and other low-income populations.
  4. To increase the efficiency and quality of care for Medicaid and other low-income populations through initiatives to transform service delivery.”

Gone is the primary emphasis on coverage. Now, emphasis is on upward mobility, responsible decision making, and beneficiary transition to commercial coverage. If Medicaid is to serve more than the poorest families and the aged, blind, and disabled, it will be as a tool to get them “up”—up the economic ladder and into “independence.”

CMS Administrator Seema Verma elaborated on these changes in a speech to the National Association of Medicaid Directors (NAMD). CMS is encouraging state Medicaid programs to pay particular attention to unemployed Medicaid recipients who do not have a permanent disability. “These are individuals,” she said, “who are physically capable of being actively engaged in their communities, whether it be through working, volunteering, going to school, or obtaining job training.” She continued, “Let me be clear to everyone in this room—we will approve proposals that promote community engagement activities.”

So Medicaid is seen as a deal—you merit it as long as you are deemed trying to be a good community member. This focus on Medicaid’s purpose as a tool for promoting community engagement is notable for several reasons:

  • The track record of tying government benefits to work requirements is checkered at best, and successful efforts require extensive job counseling efforts.
  • This affects a relatively small group of enrollees, many of whom have good reasons for not being in the workforce. Sixty percent of adult non-disabled Medicaid enrollees work, and eight of every ten adults who are non-disabled and non-working Medicaid enrollees live in working families. The majority of enrollees report not working because of family caregiving responsibilities, school attendance, retirement, or inability to find employment.
  • This group of enrollees is not driving Medicaid expenses, comprising only about eight percent of Medicaid spending in FY2014.

Fundamentally, however, this is a debate about how to prioritize access to a limited resource—finances for health care. Administrator Verma in her NAMD speech made a specific reference to preserving Medicaid availability for “deserving Americans,” the implication being that a non-disabled person without a job is less deserving of public financing and medical care than others.  This reflects a view that access to health care treatment is not a precondition for citizenship and community engagement for low-income populations, but a reward for meritorious behavior. This view stands in contrast to how we consider public education and access to health care for the elderly, which do not have to be earned.

This is not a new policy position but is in conflict with other federal policy (notably the Emergency Medical Treatment and Labor Act, which compels hospitals to provide medical care in their emergency rooms), reflecting the conflicting views on the subject in the United States. With the passage of the Affordable Care Act and the ability of states to expand Medicaid enrollment, the Obama administration took a dim view of Medicaid’s role in promoting virtue and discouraged work requirements as a condition for Medicaid eligibility. Instead they saw Medicaid as a tool for expanding access to health care.

The Medicaid program remains, however, a state-federal partnership. The administration’s stated objectives for Medicaid are not the final word. States will continue to have authority and influence over how personal merit is determined in financing health care, who is deserving, and what it truly means to be a community.