Thursday, February 28, 2013

UPDATED WITH HHS RESPONSE Is new Arkansas Medicaid expansion deal legal?

Posted By on Thu, Feb 28, 2013 at 9:44 AM

Here's a simple question that's been nagging me about the Medicaid deal: Under what statutory authority are the feds subsidizing folks between 0 and 100 percent of the federal poverty level on the exchange?

There's been a lot of talk about what we should call this new plan, since it's not really Medicaid expansion. (My vote: "The Private Option.") Under this plan, the Medicaid program isn't expanding at all. Instead, the government is going to pick up the full tab for low-income folks buying private health insurance. Technically, this will be done with "Medicaid dollars" with the money running through the Medicaid program.

Here's the thing. There's nothing about paying for people below 100 percent of the FPL to buy health insurance in the Affordable Care Act. Particularly given that this new approach will almost surely cost more, why don't they need Congressional approval? Is the idea that funding folks on the exchange just IS "Medicaid expansion" — authorized by the ACA — because it's "Medicaid dollars"? In that case, the feds may be leery of a name change!

Seriously, though, this seems at first blush to be fishy. Congress approved funding for something specific, with its own projected costs: Medicaid expansion. Could HHS, under the ACA, authorize giving every low-income person in Arkansas $1 million to buy health insurance and call it Medicaid dollars? Keep in mind that we've been told all along by HHS that people under 100 percent FPL weren't eligible for subsidies on the exchange because it wasn't in the law.

Before expansion proponents get mad at me for stirring the hornets' nest, keep in mind that if I've thought of this, folks smarter than me will too.

I asked Gov. Mike Beebe's spokesman Matt DeCample and he referred me to HHS. I've got a line in to them and will update when I hear back.

I'm not an attorney. Anyone with legal expertise, please use the comments to explain why I shouldn't be worried about this.

*UPDATE: Slate's Matt Yglesias suggests one possible answer: Arkansas will get a 1915(b) waiver as part of the Medicaid expansion to use managed care to deliver coverage. This is the deal that Florida got. A little strange for Arkansas given that our state does not have a managed care system, but perhaps simply funding folks to buy insurance on the exchange counts. Of course, under this waiver, the state has to prove that the alternative system is cost effective, and everything we know suggests that it will cost more.

*UPDATE: Nope. DeCample told me that a 1915 (b) waiver was NOT part of the deal the governor discussed with Sebelius. Sarah Kliff of the Washington Post has a post on the Arkansas "private option" forthcoming but tweeted that a waiver is not part of the deal.

*UPDATE: An HHS spokesperson provided me with a statement that doesn't answer the question:

Our goal in working with states has been to be as flexible as possible within the confines of the law. In her meeting with Governor Beebe, Secretary Sebelius expressed support for ideas from the state that would take advantage of this flexibility and said she was glad to see the state considering an innovative, state-based approach.

*UPDATE: Sounds like Kliff has the answer in her excellent explainer on the Arkansas deal.

The states get authority to do this under part of the Social Security Act (Sec. 1905A, if you want to get really specific) that allows states to use Medicaid dollars to buy private coverage for enrollees. This is known as premium assistance and already happens in a handful of states right now, although usually on a small level. Sometimes, states will do this to help Medicaid eligible residents use federal funds to buy into an employer-sponsored plan.

I still have some questions...more updates to come.

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