The collapse of the Republican effort to overhaul the health-care system and the resulting standoff in Washington has pushed the fight to the states, where a brewing conflict over Medicaid is shaping up as the next battleground.
The Trump administration is expected to rule soon on Kentucky’s push to impose work requirements and other rules on Medicaid enrollees, as other states line up to follow suit. Democrats say that would weaken the program.
This issue could be the next step in transforming a large swatch of the American health-care system, as Congress remains deadlocked between Democrats who back the Affordable Care Act, some of whom say it could be improved, and Republicans who want to uproot it but lack the votes to do so.
If states succeed in attaching tougher requirements to Medicaid, which covers one in five Americans, experts say it could become less of a traditional entitlement program and more of an arrangement where many participants earn the right to benefits only if they take certain actions.
“It is easier to take coverage away in below-the-radar, bureaucratic ways,” said Benjamin Sommers, a physician and health economist at Harvard University. “If you ask people if people on Medicaid should have to work, that’s popular, but if you ask people if they should cut Medicaid, it’s not. (But) the first may lead to the second.”
Republicans argue that Medicaid, which provides benefits to about 75 million Americans, has become far more than a safety net. Its growth, they argue, has fostered dependence by participants and threatened to swallow state budgets.
Democrats defend Medicaid as a vital form of public assistance for low-income and disabled Americans, saying it leads to better health for consumers, lowers costs for hospitals, and is essential for the needy. The proposed waivers, they say, endanger those social benefits.
Curtailing the entitlement could be politically tricky, since Medicaid’s popularity has grown in recent years, and during the 2016 presidential campaign, then-candidate Donald Trump promised not to cut it. During the Republican push to repeal the Affordable Care Act this year, proposed cuts to Medicaid fractured the GOP, becoming a central reason the repeal stalled.
The dispute also could sharpen a divide in health coverage between red and blue states. States with GOP governors and legislatures are among those with the highest percentages of uninsured, in part because they declined to take part in the ACA’s Medicaid expansion. The new Medicaid requirements could create more barriers to coverage.
A key voice within the Trump administration on the waiver requests is likely to be Seema Verma, head of the Centers for Medicare and Medicaid Services. As a consultant in Indiana, Ms. Verma helped impose requirements such as premiums on Medicaid recipients there.
Conservative state leaders hope she will approve similar requirements for them. Democrats argue that some of the more far-reaching proposals aren’t legally permissible.
A CMS spokeswoman said there is no deadline for decisions on the waivers and the process is continuing on as normal despite the recent resignation of Health and Human Services Secretary Tom Price.
Kentucky is likely to be a test case. Under the state’s waiver request, even lower-income beneficiaries would have to pay premiums based on a sliding scale, a requirement not found in most states. Many enrollees who failed to pay would be locked out of coverage for six months unless they took a financial or health literacy course and paid what they owed.
In addition, most adults would have to perform weekly job-related activities, potentially including training or volunteer work.
The proposal “is a plan tailored to meet the unique needs of Kentuckians,” said Doug Hogan, a spokesman for the governor. “It is a consumer-oriented health plan that in many ways mirrors commercial insurance coverage.”
Others say the requirements are impractical for struggling Americans who may be juggling child care, medical costs and other expenses. Health coverage is a right, they say, not a privilege to be earned by following government-imposed requirements.
“It’s a big concern,” said Clare White, a 27-year-old Medicaid beneficiary of Georgetown, Ky., who has been out of work since her job as a nanny ended. “I really like the way it works right now. I don’t need to be patronized or talked down to with these requirements.”
The battle has particular resonance in Kentucky because it is a rare conservative state that embraced the ACA and saw its uninsured rate fall sharply. Along with Arkansas, Kentucky was among the top two states to see the largest drop in its uninsured rate among states that expanded Medicaid. Seventeen states that have Republican governors as of August 2017 have expanded Medicaid, according to the Kaiser Family Foundation.
To ACA backers, that makes Kentucky a welcome success story, but conservatives there bemoan what they see as a jump in government benefits with little accountability.
The state, which ranks low in overall health status, tilted strongly against President Barack Obama, and its leaders opposed many facets of the ACA. But it became the 21st state to expand Medicaid under former Democratic Gov. Steve Beshear.
Medicaid enrollment quickly eclipsed predictions. Kentucky’s non-elderly adult uninsured rate fell from 18.8% in 2013 to 6.8% in 2015. About 440,000 people were added to the Medicaid program.
Its current governor, Matt Bevin, a Republican, won on a campaign to end the state’s Medicaid expansion, and the changes he is seeking would result in fewer Kentuckians being on Medicaid. An estimated 95,000 state residents would no longer be covered by the program five years after the changes are made, according to an analysis of data from the governor’s office.
That is partly because some people may find jobs and get coverage through their employers. But others would fail to meet the proposed requirements, such as engaging in a specified amount of work, school, community service or job-hunting.
Jim Waters, president of the free-market BlueGrass Institute for Public Policy Solutions in Lexington, Ky., said the requirements give Medicaid enrollees incentive to find jobs, which in turn gives them access to employer-provided health coverage.
“It has been spun that this is not compassionate and caring. It’s the opposite,” Mr. Waters said. “How do we show compassion if we keep people dependent on the government? The government can’t be responsible for people from cradle to grave.”
Others say it is Medicaid benefits that free people up to find jobs. Seventy-five percent of beneficiaries surveyed by the Ohio Department of Medicaid said having the coverage made it easier to seek employment.
“Far from keeping people dependent, it improves their financial independence and ability to work,” said Andrea Callow, associate director of Medicaid Initiatives at Families USA, a nonprofit that supports the ACA.
Proponents of the Kentucky waiver also say it would help contain costs. About one in three people in the state are on Medicaid, with a big impact on the state’s budget.
Under the ACA’s Medicaid provision, the federal government initially picks up 100% of the cost for states that expand the program, but that amount tapers to 90% in 2020. Kentucky will pay about $1.2 billion from fiscal 2017 through 2021 for its Medicaid expansion, state officials say.
The proposed waiver “will allow us to continue to provide expanded Medicaid coverage, but unlike the current Medicaid expansion under Obamacare, it will do so in a fiscally responsible manner,” Mr. Bevin said in unveiling the changes in August 2016.
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