Expand Medicaid Fully; Reject Risky and Expensive State Plan

Key Takeaways:

• The federal Medicaid agency is starting the process of revoking the work requirement on Georgia’s Medicaid waiver program. Work requirements have the effect of limiting enrollment, even when people are working, because they set up additional barriers to keeping coverage. Without the work requirement, at least 237,000 more Georgians could get covered through the waiver. But the state would spend about $650 million in the first year, much higher than the $76 million proposed in the fiscal year 2022 budget.
• The new costs without the work requirement are also higher than the cost to fully expand Medicaid eligibility to adults slightly above the poverty line. Full expansion would cost about $239 million in the first year and cover over 200,000 more people than the partial Medicaid expansion waiver without the work requirement. The cost per person for fully expanding Medicaid is 5 times lower than Georgia’s Medicaid waiver, because the federal government pays 90 percent of the costs for full expansion and only 67 percent of costs for partial expansion.
• Congress is considering new incentives for non-expansion states to adopt the full Medicaid expansion, by providing additional federal funds to make Medicaid expansion cost nothing to the state for two to three years or more.

In 2019, the Patients First Act authorized Georgia to partially expand Medicaid to adults with incomes below the poverty line (<$12,880 a year for an individual). This differs from full Medicaid expansion, which extends coverage for adults below 138 percent of poverty (<$17,770 a year). On October 15, 2020, Georgia received approval for a Medicaid 1115 waiver that would partially expand Medicaid and require enrollees to report 80 hours of work or volunteer hours each month and pay a monthly premium. The waiver program is set to begin enrollment on July 1, 2021. The waiver approval expires on September 30, 2025, but the Centers for Medicare and Medicaid Services (CMS) has the authority to revoke approval for some or all parts of state waiver plans if they determine the plan is not meeting the statutory objectives of the Medicaid program.

On February 12, 2021, the CMS sent a letter to the commissioner of the Georgia Department of Community Health to inform the state they have preliminarily decided the work requirement does not promote the objectives of the Medicaid program. The letter cited the impact of the COVID-19 pandemic on the health of Medicaid enrollees and the uncertainty of economic opportunities, access to transportation and many other factors that would make it unreasonably difficult for people to meet the requirement. CMS changed the status of Georgia’s Medicaid waiver from “approved” to “pending” and will allow the state agency 30 days to submit any additional information on why the work requirement should not be removed. CMS will review this information and notify the state of its decision. If they decide to amend or withdraw Georgia’s waiver, the state can request a hearing to challenge the decision before the change takes effect. The actual timeline for withdrawal is unclear because negotiations between CMS and states have ranged from months to almost two years.

If CMS decides to revoke the work requirement, more Georgians would be able to gain health coverage, but the state would pay much more than the $76 million allocated in the budget this year for the plan. The current waiver plan estimates about 480,000 uninsured Georgians make wages below the poverty line, but the state expects to only cover about 31,000 people in the first year and a total of 66,000 people over the entire 5 years of the waiver program.

Because work requirements have the demonstrated effect of limiting enrollment^[1], removing the work requirement would allow at least 237,000 more people to get covered in the first year. Having that many more Georgians covered will improve access to health care and bring more benefits to hospitals serving many uninsured patients. But under the partial Medicaid expansion, the state only gets 67 percent of the costs covered by the federal government rather than 90 percent under full expansion. So covering about 269,000 people under the waiver plan would cost $651 million in the first year, compared to covering 481,000 people through full expansion at a cost of $239 million.

Proposed Federal Measures Would Further Incentivize Full Medicaid Expansion

Congress is considering two proposals to provide additional financial incentives to the 12 remaining non-Medicaid expansion states, including Georgia, to take up the deal of covering low-income adults with most costs paid for by the federal government.

The States Achieve Medicaid Expansion (SAME) Act of 2021 would allow states who have not expanded Medicaid to receive the original deal offered to states in 2014 – the federal government would fund 100 percent of the costs for the new expansion enrollees covered for three years and phase down to 90 percent for the remainder of the program. Taking this deal would mean Georgia could expand Medicaid and cover approximately 500,000 people at no cost over the next three years. This is also timely and important for Georgia’s ongoing COVID-19 response and recovery as we would be able to cover more adults who lost their health coverage during the pandemic and have no new costs for doing so.

The second proposal is included in the U.S. House Committee on Energy and Commerce reconciliation bill for COVID-19 relief. This bill would give states that newly adopt the Medicaid expansion a higher match for their existing Medicaid program for two years. The bill does not propose changing the matching rate for Medicaid expansion, so it would remain at a 90 percent match. For Georgia, this means two years of the federal government paying 72 percent of the costs for our traditional Medicaid program rather than 67 percent. This would result in about $1.9 billion in new federal funding for the state to fund existing Medicaid programs, freeing up state funds to prevent budget cuts and  restore cuts made to safety net programs and services for communities of color, immigrants, people with disabilities and other groups hit especially hard by the pandemic.^[2]

This funding can also be used to pay for the state share of Medicaid expansion. The net cost of expansion (costs minus new state revenue and savings to agencies) is about $143 million in the first year. Assuming 3 percent growth each year, $1.9 billion could pay for the net cost of 9 years of full Medicaid expansion.^[3]

This new federal funding over two years would more than cover the costs of Medicaid expansion and would create state savings to avoid cuts to critical state services such as education, health care and safety net programs.

Medicaid expansion is already a great deal due to the 90 percent federal match and the cost savings to hospitals and state agencies from covering a significant number of uninsured people. However, both incentives would bring even more federal support to the state at a critical time for our health care system and help the state move into an equitable recovery, especially important considering the way the pandemic has disproportionately affected Georgia’s communities of color and workers of color.^[4],[5]

Methodology

Cost for approved Medicaid waiver based on enrollment estimates outlined in October 15, 2020 approval letter from CMS and cost estimates from the waiver application submitted to CMS on December 23, 2019.

Estimated enrollment in the waiver plan without work requirements is from Kaiser Family Foundation 2019 estimates on the number of Georgians who are not already eligible for Medicaid and have incomes below the poverty line. ^[6]

This analysis does not account for the research on how monthly premiums for Medicaid coverage led to reduced enrollment. At this time, CMS has not explicitly stated they are seeking to remove the premium requirement.

The enrollment and costs for full Medicaid expansion are from a state fiscal note completed on January 18, 2019. ^[7]

Endnotes

^[1] Sommers, B.D., Chen, L., Blendon, R.J., Orav, E.J., and Epstein, A.M. (2020, September) “Medicaid Work Requirements In Arkansas: Two-Year Impacts On Coverage, Employment, And Affordability Of Care” Health Affairs. https://www.healthaffairs.org/doi/10.1377/hlthaff.2020.00538

^[2] Straw, T., Lueck, S., Katch, H., Solomon, J., Broaddus, M., and Lukens, G. (2021, February 10) “Health Provisions in House Relief Bill Would Improve Access to Health Coverage During COVID Crisis.” Center on Budget and Policy Priorities. https://www.cbpp.org/research/health/health-provisions-in-house-relief-bill-would-improve-access-to-health-coverage

^[3] GBPI calculations using cost estimates from State Auditor Greg S. Griffin, “Fiscal Note House Bill (LC 46 0015) Georgia Department of Audits and Accounts, January 18, 2019.

^[4] Richards, D. (2020, May 7). Communities of color hardest hit by coronavirus in Georgia. 11Alive News. https://www.11alive.com/article/news/health/coronavirus/communities-of-color-hardest-hit-by-coronavirus-in-georgia/85-37229ec2-c58f-4fa9-95d9-c0537771b80a

^[5] Khalfani, R. (2020, December 18). State of working Georgia: 2020 COVID crisis year-end review. Georgia Budget and Policy Institute. https://gbpi.org/state-of-working-georgia-2020-covid-crisis-year-end-review/

^[6] Garfield, R., Orgera, K., & Damico, A. (2021, January 21). The coverage gap: Uninsured poor adults in states that do not expand Medicaid. Kaiser Family Foundation. https://www.kff.org/medicaid/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid/

^[7] To view these estimates, see: Kanso, D. (2019, Feb. 21). Senate bill 106: Medicaid waivers could reshape Georgia’s health care system & state budget. Georgia Budget and Policy Institute. https://gbpi.org/medicaid-waivers-could-reshape-georgias-healthcare/