Dive Brief:
- Oklahoma on Monday submitted a waiver asking CMS permission to enact block grants in Medicaid under guidance the Trump administration released earlier this year.
- It’s the first state to take advantage of the controversial guidance, and hinges on Republican Gov. Kevin Stitt’s plan for Medicaid expansion, called SoonerCare 2.0. The requested capped funding, if approved by CMS, would apply to an estimated 220,000 adults with income less than 133% of the federal poverty level who receive Medicaid coverage under the planned expansion.
- Oklahoma’s waiver includes a work requirement and asks beneficiaries to pay premiums for their coverage based on income. The state, which anticipates receiving approval by November, is aiming for a July 2021 start date.
Dive Insight:
The Trump administration in January rolled out the plan to cap funding in Medicaid, dubbed Healthy Adult Opportunity. States can apply for permission to eschew the program’s traditional structure, where states receive flexible funding depending on enrollment. States can instead receive a fixed federal payment for all able-bodied adults covered under their state’s Medicaid expansion under the Affordable Care Act and be exempted from some of Medicaid’s requirements.
Stitt pledged Oklahoma would be the first state to apply for the waiver, calling it an avenue to migrate away from a fee-for-service model and toward value-based payments. Monday’s request for a waiver also includes work requirements, a controversial program mandating able-bodied beneficiaries work, volunteer or attend school for at least 80 hours a month. Utah, the last state practicing work requirements after several got shot down by courts, paused them earlier this month due to the coronavirus pandemic.
Oklahoma’s waiver would enact a per-person spending cap on the expansion population and give it more flexibility on prescription drug offerings. It would also require beneficiaries pay premiums based on income, at $0, $5 or $10 monthly for an individual or $0, $7.50 or $15 for families, along with co-pays up to the 5% out-of-pocket cost sharing limit.
Stitt asked CMS for approval to expand Medicaid in March. The governor is racing to get ahead of State Question 802, the voter initiative to expand Medicaid, which would amend the state constitution to expand without any restrictions, on a June 30 ballot.
Block grants in the safety net insurance program, which covers some 75 million Americans, are a long-held conservative policy dream. The administration contends block grants will save states money, allowing them more flexibility in spending, while liberal critics and academics argue it will lead to red states culling services or limiting enrollment.
The Commonwealth Fund estimates the nationwide implementation of Medicaid block grants would immediately cut federal funding for the program by 10.5%, or $110.4 billion per year. Additionally, since federal dollars have a ceiling, capped funding hamstrings states’ ability to respond to unexpected public health crises, such as the coronavirus pandemic currently sweeping the U.S.
Lawmakers in Washington, D.C., are pouring money into the healthcare system to help providers facing an onslaught of COVID-19 cases. Safety net programs are under increasing stress amid the pandemic as millions of Americans lose their jobs, booting them off employer-sponsored insurance and onto individual market coverage or government plans like Medicaid, a cornerstone of the safety net since the 1960s.
Still, Stitt contended that “even during this time of immense change due to the COVID-19 pandemic, it is important to move forward,” in a statement. Oklahoma counts for less than 1% of the nation’s total coronavirus cases.
The state is preparing to slash agency budgets, declaring an almost $417 million revenue failure for the 2020 fiscal year on Monday due to the halted economy. Capping spending in Medicaid, which is usually the first or second line item in states’ budgets, by enacting per-person block grants could go far to save Oklahoma money on its roughly 807,000 beneficiaries.
Arkansas Gov. Asa Hutchinson has also said he supports the block grants, and Tennessee submitted a waiver proposal seeking permission for an inflation-weighted block grant before the Trump administration even debuted its program. Alaska and Louisiana have also signaled interest.