Study: Adopting Medicaid Expansion for Temporary Waivers ‘Ill-Advised’ for States

Published October 15, 2013

A new study challenges the claim of some lawmakers that by adopting the Obamacare Medicaid expansion states can gain greater flexibility in reforming the controversial program.

The report is a joint project of Michigan’s Mackinac Center for Public Policy and Ohio’s Buckeye Institute for Public Policy Solutions. It was coauthored by Buckeye President Robert Alt and visiting fellow Nathaniel Stewart.

“It is unrealistic to assume that the Obama administration will weaken the Medicaid requirements that they fought so hard to get,” Alt said. “No state should expand Medicaid based upon the illusory hopes of waivers, which are inadequate to genuinely reform Medicaid’s ills.”

‘Illusory’ Waivers

In the study, Alt and Stewart explain how relying on waivers to operate a more flexible and cost-effective Medicaid program may be “illusory.”

The authors write, “[R]eliance on waivers as a source of long-term flexibility to reform the operation of Medicaid programs is ill-placed, and trading expansion for waivers is a risky bargain for states.”

At least 19 states have rejected the expansion, and several more are leaning that way. Several versions of expansion under consideration would require states to seek permission from the federal government for waivers to implement various Medicaid reforms, including modest copays and a four-year cap on benefits.

Unlikely to Result in Reforms

The Mackinac/Buckeye study provides three reasons to conclude that even if waivers are initially granted, they are unlikely to provide the foundation for genuine and permanent reforms.

First, Medicaid waivers are “designed to be temporary,” meaning legislators would be expanding the program in return for reforms that may have to be retracted later.

Second, waivers are “highly discretionary” on the part of officials in the Obama administration and the federal Department of Health and Human Services, which will grant them only to the extent they are in accord with the policy goals of the Patient Protection and Affordable Care Act and Social Security Act.

Third, waivers are also subject to judicial review, even after they’ve been approved by federal officials.

For these reasons, the study says, it’s unlikely waivers will work to sufficiently offset the costs of expanding Medicaid.

The paper describes the experience of several states that have been denied waivers to modify their Medicaid programs or even to continue existing reforms, including Oklahoma, Indiana, Arizona, California, Florida and Connecticut.

“Just as it would be imprudent for anyone to enter into a legally enforceable written contract with the expectation that the he can later persuade the other party to waive parts that are no longer preferable, likewise agreeing to expand Medicaid … based upon the hopes of procuring future waiver concessions is ill-advised,” the study says. “Any decision to accept the Medicaid expansion today should not be based on the illusory promise of a federal waiver tomorrow.”

Jarrett Skorup ([email protected]) is a research associate at the Mackinac Center for Public Policy.


Internet Resources:

Medicaid: “Waivers are Temporary, Expansion is Forever” by Robert Alt and Nathaniel Stewart