The Leaflet: States Should Take Lead in Health Care Reform

Published September 22, 2017

Whether congressional efforts to repeal and replace Obamacare succeed or not, there is plenty states can do to improve their Medicaid programs and make high-quality health care more affordable. 

Heartland Senior Policy Analyst Matthew Glans explores state-based solutions to the troubled entitlement program in his new Policy Brief, titled “Don’t Wait for Congress to ‘Fix’ Health Care: States can implement real health care solutions today.” 

Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled, even as it drives health care spending to unsustainable heights. The Affordable Care Act (ACA) has made a bad situation worse, by encouraging states to expand, rather than reform, this failing program. ACA offers large federal subsidies to states willing to provide Medicaid coverage to individuals with incomes up to 133 percent of the federal poverty level. Currently, 31 states and the District of Columbia have expanded their programs in exchange for federal subsidies. Subsequently, Medicaid enrollment and costs have been increasing faster than what was predicted. 

Some of these states are now working to roll back Medicaid expansion. For instance, in Arkansas, lawmakers are applying for waivers from the Department of Health and Human Services (HHS), which would decrease Medicaid eligibility from 138 percent of the federal poverty level to 100 percent and add work requirements for adults who are still enrolled in Medicaid. State legislators in Ohio and Oregon are looking to pass similar reforms. 

States that have not expanded Medicaid under ACA also can and should submit ambitious requests for Section 1115 waivers to HHS Secretary Tom Price to improve their Medicaid services. These waivers provide state lawmakers with the opportunity to have “experimental, pilot, or demonstration projects likely to assist in promoting the objectives of the Medicaid law.”

States can also apply for Section 1332 waivers, which permit state lawmakers to end numerous unpopular and ineffective Obamacare provisions, such as the individual mandate, employer mandate, and premium tax credits. 

Lawmakers concerned about the effectiveness of waivers should consider the reform successes enjoyed by Florida and Rhode Island, who over the past decade improved their Medicaid programs through the waiver process. In 2006, Florida began offering different plans and premiums to its existing Medicaid enrollees. As Glans notes in his Policy Brief, “By providing existing Medicaid recipients with a range of premiums and plans from which to choose, a pilot program in Florida called the Medicaid Cure program dramatically improves health care competition and consumer choice.”

Rhode Island’s HHS waiver, which was first implemented in 2009, is estimated to have saved the state $100 million during its first three years. “The waiver replaces the traditional federal matching grant with a capped grant,” wrote Glans. “In exchange for the cap, the state received flexibility in administering its Medicaid program and an incentive to keep costs down.” The waiver was extended to remain active until 2018.

In addition to fixing their Medicaid programs, states also can implement a long list of other reforms that expand supply and reduce prices, including repealing coverage mandates, guaranteed issue, community rating, occupational licensure laws, and certificate of need regulations. States also can expand health savings accounts and encourage telemedicine, high-risk pools, and price transparency. 

The time for reform is now. State lawmakers cannot afford to waste this opportunity while they wait for Washington, DC to solve their problems for them.


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