Could a Clinton HHS entice more Medicaid expansions?

When I was 19, I spent a summer on an archaeological dig in New Mexico. Work groups were mainly led by grad students in archaeology, and I recall someone telling the tale of a Ph.D thesis (not hers) that devoted 600 pages to demonstrating that an artifact dating technique did not work. She said,
somewhat ruefully, something to the effect of, "that's supposed to be useful too."

Below, I want to devote 600 words to an ACA-strengthening proposal that probably won't work. Writing 500 words before realizing this probably has something to do with the decision. But maybe floating it is useful. Maybe it suggests some variation that might work.

The context: I was combing Hillary Clinton's raft of healthcare reform proposals for measures that might be enacted without legislation.  In a prior post, I looked at her proposal to help states form public options in their ACA marketplaces. Next up:

Entice states that have refused the Medicaid expansion to embrace it. Clinton's healthcare page reiterates an Obama administration proposal to "to allow any state that signs up for the Medicaid expansion to receive a 100 percent match for the first three years." That was the original plan, with the federal share dropping in stages to 90% thereafter. But that was beginning in 2014. By statute, at present, states that opt in late don't get the full three years of full reimbursement.Beginning in 2017, the federal contribution to the cost of the expansion starts phasing down to a mere 90%, regardless of when the state implemented (or will implement) the expansion. Altering that would require legislation.

An alternate proposal to entice more of the 19 Republican-led (wholly or partly) states that have so far refused the ACA Medicaid expansion to embrace it was put forth by the Urban Institute's Linda Blumberg and John Holahan. They proposed "to give states the option of expanding Medicaid coverage up to 100 percent of FPL rather than requiring them to expand to 138 percent of FPL if they expand at all."  In non-expansion states, eligibility for marketplace subsidies currently begins at 100% FPL, as opposed to 138% FPL in states that accepted the expansion (and so place applicants below that threshold in Medicaid).

Allowing states to expand eligibility only to those below 100% FPL would not only reduce the number of new Medicaid enrollees -- a desideratum of red state officials -- but would avoid disruption to the ACA marketplace. In many nonexpansion states, enrollees in the 100-138% FPL range make up a third or more of the enrollment total. Hostile as Republican officials purport to be toward the exchanges, minimizing disruption generally means minimizing trouble. Moreover, the federal government pays 100% of a marketplace premiums subsidy, as opposed to a Medicaid expansion contribution phasing down to 90%.

On the downside, states that have expanded Medicaid eligibility to 138% FPL might opt to toss those in the 100-138% FPL range into the private plan marketplace. And as Kaiser's recent focus group study of low income ACA beneficiaries' experience with their coverage indicates, Medicaid works better for low income enrollees than private plans. It should be noted that Blumberg and Holahan's proposal was part of a package that would also reduce premium subsidies for those in the 100-138% FPL range. Currently the subsidized premium for a benchmark silver plan for those in this income range is  2% of income. Blumberg and Holahan would reduce that to 1%.  They note, however, that even the 94% actuarial value attached to a silver plan for enrollees in this income range "might lead to some additional out-of-pocket costs relative to a Medicaid plan." And even relatively small copays can deter low income plan enrollees from accessing needed care.

Giving states the option to expand Medicaid to just 100% FPL while obtaining full federal funding for the expansion would probably require legislation. The ACA stipulated that states would expand Medicaid to adults with incomes up to 138% FPL (133% plus a 5% income offset).  Some flexibility in the terms of expansion is accorded by Section 1115 waivers, which some states have used to alter the Medicaid benefit under the expansion, e.g. by imposing premiums, copays, or a health savings account requirement, or by offering private plan benefits equivalent to Medicaid.  Michigan's approved waiver provides that enrollees in the 100-138% FPL range have the option of enrolling in private plans available in the ACA marketplace. Wisconsin's Medicaid program, however, which provides Medicaid coverage to adults only up to 100% FPL, does not qualify for the ACA's federal funding share.

Could HHS opt to allow states to expand eligibility to adults with incomes up to 100% FPL only and still access the federal funding stipulated in the ACA? I asked Timothy Jost, professor of law at Washington and Lee University. The answer is probably not:

The Supreme Court in the NFIB case said that, although the federal government could not threaten states that refused to expand Medicaid with loss of all Medicaid funding, states that chose to expand would have to comply with the ACA expansion requirements. ACA section 2001 provides for coverage of adults under 65 not otherwise eligible for Medicaid with incomes up to 133% of poverty (actually 138% with a 5% income disregard) and, more importantly, only provides the enhanced federal match for this population.  The position of HHS has consistently been that if states want the enhanced federal match they must expand up to 138% of poverty.  It is, I suppose, imaginable that someone could read the statute differently in the future, but it is very unlikely.  It would be even less likely that the statute would be interpreted that way for some states but not for others. 

And casting a lay eye on the law itself, it provides that states make medical assistance available to all adults under age 65, excluding a few specific categories, "whose income does not exceed 133 percent of the poverty line."

That seems pretty straightforward. And speeding acceptance of the expansion in holdout states at the cost of opening the door to reduced Medicaid access in already-expanded states does not seem worth the cost.

On the other hand, states have already, via Section 1115 waiver, adopted the expansion while 1) placing enrollees in private plans rather than traditional Medicaid or Medicaid managed care plans (Arkansas); imposing premiums (placed in health savings accounts) equivalent to those charged to private plan enrollees in the 100-138% FPL income range in nonexpansion states (Michigan); and giving enrollees in the 100-138% FPL range the option of enrolling in private marketplace plans (also Michigan).

There is thus a potentially porous border between Medicaid and marketplace coverage for ACA beneficiaries in the 100-138% FPL range in particular. Just as a Clinton HHS could signal receptivity to state proposals to form a public option or otherwise enrich coverage, so could it increase the Obama administration's already considerable willingness to entertain proposed conservative variants on the Medicaid expansion.