HHS to states: There will be no 'partial' Medicaid expansion

Agency will consider partial waiver requests starting in 2017

Topics: Medicaid, Reimbursement, Finance

December 11, 2012

HHS on Monday said that the Affordable Care Act (ACA) does not allow for a partial expansion of Medicaid, although the agency will consider partial waiver requests beginning in 2017.

Under the ACA, the federal government will pay to expand Medicaid eligibility to people at or below 133% of the federal poverty line in 2014 in every U.S. state. Federal contributions to the expansion will drop to 95% in 2017 and remain at 90% after 2020, according to the ACA. However, the Supreme Court's ruling on the law allowed states to opt out of the expansion, and some governors began discussing the possibility of only partially expanding the program in their states.

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In guidance sent to governors on Monday, HHS said that it does not have the legal authority to allow states to pursue a partial expansion.

The agency wrote, "The law does not provide for a phased-in or partial expansion," adding, "As such we will not consider partial expansions for populations eligible for the 100% matching rate in 2014 through 2016."

However, HHS will consider partial waiver requests beginning in 2017, when federal payments begin to decline. The guidance stated that states might be able to get a higher federal match for a partial expansion then.

HHS officials also noted that states can apply to make smaller changes to their Medicaid programs but that the federal government would only match their spending, not pick up all of their costs, as it would under the expansion.

The guidance also answered 39 commonly asked questions about the Medicaid expansion, as well as the creation of state-based health insurance exchanges.

Responding to the guidance, Republican Governors Association (RGA) Communications Director Mike Schrimpf said, "The answer is disappointing for many governors who hoped the administration was more serious about providing states flexibility."

Meanwhile, Louisiana Gov. Bobby Jindal (R), chair of the RGA, said HHS's guidance "is as disheartening as it is short-sighted," adding that while HHS's "answer will make a state's decision on Medicaid expansion more difficult, governors will continue to ask the president to pursue real Medicaid reform and we hope he will join us." Jindal was one of 11 Republican governors who last week sent a letter to President Obama requesting a meeting to discuss the effects of the ACA, particularly the requirements of the Medicaid expansion.

HHS's decision could mean that the Obama administration does not expect many states to pass up the federal money, or that it is okay with just a few states initially participating in expansion, the Washington Post's "Wonkblog" reports.

According to Matt Salo, executive director of the National Association of Medicaid Directors, it is hard to predict how HHS's guidance will affect states' decisions on the expansion. "It pushes some of those states that were pushing for partial expansion to yes and some to no. ... It will be a mixed bag," he said (Baker, "Healthwatch," The Hill, 12/10; Adams, CQ HealthBeat, 12/10 [subscription required]; Aizenman, Washington Post, 12/10; Radnofsky, Wall Street Journal, 12/10

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