Monday, January 28, 2013

DHS: "Circuit Breaker" compromise would be legal for Medicaid expansion

Posted By on Mon, Jan 28, 2013 at 2:05 PM

Mike Beebe image
  • Gov. Beebe: Circuit breaker is "brilliant idea."

When we first asked Gov. Mike Beebe about the "circuit breaker" idea out of Arizona (automatically opting out of Medicaid expansion if the feds reduce the matching rates in the future), he said it was fine but noted that states can already opt out at any time, an assurance he got in writing from the feds.

But he seems to have warmed up to the plan considerably, calling it a "brilliant idea" on AETN Ask the Governor last week, and it's easy to see why — by legislating a trigger upfront, you guard against Republican concerns that once a program is expanded, it's politically impossible to pull it back, even if the feds don't hold up their end of the bargain down the road.

"If [the match rates] ever change, it's automatically done," Beebe said. "The state's automatically withdrawn from the program.... One of the arguments is, well, once you start it you'll never be able to take it away. Nobody will have the political courage to vote to un-do it. But if you put it on the front end where it's automatic, nobody has to vote on that later. That's what [Brewer] did. She put a trigger mechanism that if the feds change that ten percent...then automatically their participation in the program ceases."

This seems like a perfect answer to conservative fears that some day down the line the feds will renege on their obligations under the law. Republicans have responded that past rulings from the Eighth Circuit would make it legally impossible to reduce Medicaid commitments.

This sounded off to us, as none of the relevant cases touched on eligibility (Beebe also told reporters that it wouldn't be an issue). We checked with the Department of Human Services and heard back from them today. According to their legal counsel, changing eligibility thresholds would not run afoul of the Court and a "circuit breaker" would be legal.

We are not aware of an 8th Circuit case that impairs Medicaid’s ability to set eligibility thresholds at any point within federally established ranges, or to change those thresholds upon federal approval and compliance with the Arkansas Administrative Procedure Act.

There are two well-known 8th Circuit opinions from Arkansas. The first, Arkansas Medical Society v. Reynolds, concerned Medicaid reimbursements to health care providers and has no bearing on recipient eligibility criteria. The second, Pediatric Specialty Care, dealt with the scope of services that must be covered for children under the Early and Periodic Diagnosis, Screening, and Treatment program. That case limits Medicaid’s ability to adjust what is covered for children, but has no bearing on who is eligible for Medicaid.

That only leaves the argument we're sure to hear from Sen. Cecile Bledsoe — that it would be a "travesty" to give coverage to folks and then possibly take it away years from now. Why she thinks it's better to never give them coverage at all remains unclear.

P.S.: The circuit breaker is indeed a very clever compromise idea from the Brewer administration, and they've also gotten a lot of attention for their catch that legal immigrants below 100 percent of the federal poverty level are eligible for subsidies on the exchange (leading to awkward political optics without expansion, but we're skeptical that this is a winning argument for expansion proponents). But the real headline: the budget documents out of Arizona — prepared by an administration deeply opposed to Obamacare and featuring plenty of conservative skepticism about expansion — still found that in addition to expanding coverage it would save the state money money, save hospitals, stimulate the economy, etc. This isn't the Arkansas DHS that local Republicans refuse to believe. These are their ideological allies and they come to the same conclusion that DHS and Beebe did: for individual states, saying yes to Medicaid expansion is a no brainer.

***UPDATE: I asked Speaker Davy Carter about the circuit breaker concept. He said that it would be a prerequisite for any expansion deal, but was at pains to be clear that he was not expressing support for full expansion with a circuit breaker at this time:

That has to be in there. You go through a pay rate change, we can’t afford it. We’re debating right now whether we can afford it the way it is. You stick it in—the rules change, we’re out. The political pressure otherwise to place on future members of GA would be too great. At a minimum that has to be in there.

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