CQ TODAY ONLINE NEWS – HEALTHBEAT MONDAY
June 17, 2011 – 8:11 p.m.
Medicaid Mandate Targeted in Debt Talks, but Savings Are Questionable
By John Reichard, CQ HealthBeat Editor
As talks intensify over reducing the nation’s debt, there is a real chance that negotiators could end up eliminating a 2009 rule requiring states to maintain current levels of Medicaid eligibility.
Republicans don’t much like the rule, called the “maintenance of effort” mandate, which was supposed to expire this month but was extended in the 2010 health care law. And eliminating it would give them a psychological lift in their so-far futile effort to bring down the law (PL 111-148, PL 111-152). Democrats and the Obama administration might find scrapping it useful as well — they could say they have started to overhaul costly entitlement programs.
But it’s a mistake to think that eliminating the “MOE” rule would significantly reduce Medicaid spending and enrollment. There are two reasons for this. First, states would only be able to roll back eligibility to a point, meaning savings would be limited. Second, those states most eager to get rid of the rule don’t cover that many people in Medicaid anyway.
The MOE originated in the 2009 stimulus law (PL 111-5), which gave states billions in extra Medicaid funding. In exchange, states had to maintain “eligibility standards, methodologies and procedures” in place as of July 1, 2008, until June 30, 2011, the day the extra stimulus funding stops. That effectively prevented states from using the new money for non-Medicaid budgetary needs.
The 2010 health care overhaul then extended the MOE for adults on Medicaid until 2014, when the state insurance exchanges start, and for children through 2019. But the law did not continue the flow of extra money to maintain coverage levels required by the MOE.
“The reason they put it in effect was to say we ought to not slide backward so we have a higher mountain to climb in 2014,” said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured. In 2014, the Medicaid eligibility threshold rises to 133 percent of the federal poverty level, extending coverage to an estimated 16 million uninsured Americans.
But even with somewhat improved revenue, states continue to struggle to balance their budgets, especially because the stimulus money is almost gone. Republican governors are pressuring members of Congress to pass a bill (
At the same time, officials in Washington are under heavy pressure to cut federal spending in many areas, including Medicaid.
“They’re talking about trillions — with a ‘t’ — in cuts,” said Matt Salo, executive director of the National Association of Medicaid Directors. “And when you’re talking about trillions in cuts, almost everything has to be on the table,” including removing the requirement barring eligibility reductions.
But with trillions to cut, ending MOE provisions would do little to balance the federal budget. The Congressional Budget Office estimates that
The Power of the MOE
States want to eliminate the MOE not to slash Medicaid enrollment but to make some pragmatic changes, said Salo, who added that the requirement has also blocked some anti-fraud efforts. “We had situations in a couple of states where they do self-attestation of income — no documentation of income required. Tell us what your income is and we’ll enroll you. You don’t check. That’s a really easy tool to get people in.”
That procedure, Salo said, lacks the oversight needed to verify an applicant’s income. When states tried to toughen it, the Health and Human Services Department objected, saying that would violate the MOE prohibition on enrollment policy changes, he said.
Medicaid Mandate Targeted in Debt Talks, but Savings Are Questionable
He also said the MOE has gotten in the way of states’ efforts to crack down on people who transfer or hide assets in order to qualify for Medicaid. A 2006 deficit reduction law (PL 109-171) gave states new tools to fight that kind of fraud. But when Virginia tried to use the power, Salo said, HHS blocked it on MOE grounds.
Other analysts say that the MOE does not, in fact, inhibit anti-fraud efforts and that Medicaid loses far more money to phony billing by providers and suppliers than it does through undeserving enrollees slipping into the program. And the states that most ardently back MOE removal won’t save much, they add.
“Many states have not expanded beyond core federal minimum eligibility requirements, except for children. If the MOE is repealed, states still could not reduce eligibility below these federal minimums. However, states could tighten enrollment procedures, which would make it difficult for individuals to obtain and retain coverage if the MOE is repealed,” said Robin Rudowitz, a Kaiser Family Foundation analyst. CBO estimates that 300,000 Americans would lose coverage if the MOE were repealed, small compared to the 67 million now in Medicaid.
Health care law defenders say if the MOE rule goes, many children would lose coverage. And the planned Medicaid expansion in 2014 would be even more of a stretch. Urban Institute President Robert Reischauer said that if enrollment does contract, “two years from now we’ll be sitting here saying, ‘How can the states make such a huge change in who’s covered under Medicaid?’ I mean the expansion’s going to be even bigger than we thought.”