Arizona gov wants more flexibility on Medicaid eligibility requirements

In a letter to House Speaker-elect John Boehner, Arizona Governor Jan Brewer highlighted an area of concern for her and other governors when implementing provisions of the new federal health care law. The suggestion offered by Mrs. Brewer to incoming House leadership would allow states to make cuts to their Medicaid rolls without losing federal matching funds.

Referred to as a Maintenance of Effort (MOE) requirement, they are meant to discourage states from restricting eligibility levels or making it more difficult for citizens to enroll when changes to program funds are made. In the case of the Patient Protection and Affordable Care Act, the Medicaid MOE originally introduced under the stimulus act, was extended from FY 2011 to FY 2014 when health insurance exchanges are to be stood up by state governments.

To help states deal with the costs of federal assistance benefit programs, the federal government issues Federal Medical Assistance Percentages (FMAPs) to determine the federal portion of matching funds. ARRA included funds that increased FMAPs by 6.2 percentage points for a year. In August 2010, Congress passed a scaled back extension of the enhanced FMAP, scaling the 6.2 increase down to 1.2 percentage points by April 2011. Until January 1, 2011, states are scheduled to receive matching funds ranging between 62 and 84 percent of the states’ Medicaid costs.

Republican lawmakers in Congress thought the enhanced FMAP was too costly, and fought for a reduced extension in exchange for passage of the Teacher Jobs and State Fiscal Relief bill. The reduced extension brings down the total cost from $24 billion to $16.1 billion.

At the time, Senate Republican Leader Mitch McConnell called the bill, “just the kind of bloated, slapdash affair Americans have come to expect and to loathe from Democrats in Washington.”

“The purpose of this bill is clear: It’s to create a permanent need for future state bailouts, at a time when we can least afford it,” he said.

The funds are due to expire in 2012.

In March 2010, Gov. Brewer signed a package of state budget bills that eliminated the state’s CHIP program, KidsCare, beginning FY 2011. The decision would have saved the state $18 million per year by dropping coverage for 47,000 children, but the state’s legal counsel said the MOE requirements would cause the state to loose far more in federal funding for Medicaid.

So Gov. Brewer is seeking an alternative solution.

Building on earlier media reports for a state waiver to the ACA’s eligibility mandates, the Arizona governor is now asking the would-be Speaker and other Congressional leaders to eliminate the MOE requirements – effectively allowing the state to restrict eligibility for federal benefits, without losing enhanced FMAPs.

Arizona has seen its rolls increase from 18 percent in 2007 to 30 percent this year, which will increase the state’s match requirements by almost $700 million when enhanced FMAP expires July 1, 2011, she said.

“We cannot afford this increase without gutting every other state priority such as education and public safety. Put quite simply, we have a Medicaid program that is not affordable or sustainable.”

In her letter, Gov. Brewer says that because her state in 2000 began covering all persons below 100 percent of the federal poverty level, the state is worse off than others. But rather than ask for a waiver for her state, the governor says Congress should eliminate the ACA MOE so that states can address their budget problems by reducing eligibility standards for Medicaid programs.

She asks that Congress strike the ACA MOE as part of a “first step” repeal and replace effort, concluding that if left unchanged, “the ACA will turn states into tax collectors for Uncle Sam’s health care mandates.”

“If hundreds of waivers from the rigid ACA mandates can be given to various companies and labor unions, it is more than appropriate for Congress to grant some flexibility to our struggling states on Medicaid eligibility standards.”

To read the letter in its entirety, click here.