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Commentary: Biden administration moves to limit state flexibility on Medicaid

Commentary: Biden administration moves to limit state flexibility on Medicaid

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When it comes to health care, the Biden administration has a clear goal: to strip away state flexibility and consolidate greater federal control — so much so that it’s willing to nullify settled agreements that the government has had with many states.

Upon taking office, the president issued an executive order directing the U.S. Department of Health and Human Services to review existing Medicaid policies to determine which should be suspended, revised or rescinded. It also sent letters to states notifying them that any previous agreements related to the process of reviewing waivers no longer applied, thus fast-tracking the process for the federal government to rescind state agreements.

Last month, the Biden administration took action to strip state policymakers of their ability to help able-bodied, low-income individuals either work, volunteer or prepare to work in exchange for getting taxpayer-funded health care benefits through Medicaid. It sent letters to states with approved or pending work requirement agreements notifying them that the work requirement provisions of those agreements were no longer supported by the administration and under further review.

Two states, Arkansas and New Hampshire, have received official notice that their agreements on integrating work into Medicaid are null and void. Numerous other states still await their fate.

The principle of integrating work as a condition of receiving welfare benefits is not new. As a matter of fact, work requirements have been part of the welfare infrastructure for decades. Yet, despite a steady decline in poverty since the principle was adopted as part of overhauling the welfare system in the 1990s, reversing this principle appears to be part of a larger effort to remove work as condition of receiving welfare benefits across the board.

In Medicaid, the impact goes beyond undermining the principle of work. It also undermines the principle of state flexibility. State flexibility in Medicaid is important. Medicaid is a need-based government welfare program that provides health care services to certain low-income individuals. The federal-state partnership of Medicaid gives states the latitude to design their Medicaid program in ways to address the unique needs in their states and prevents the program from morphing into another federally controlled program.

Most recently, the Biden administration took another unprecedented step in rescinding a key element of Texas’s long-standing Medicaid waiver, which the Trump administration extended for 10 years. This waiver allowed Texas to use Medicaid dollars to compensate providers for serving the uninsured. While the Biden administration’s rationale for the Texas repeal is on process grounds, some observers suggest the real reason behind this effort is to pressure Texas to expand their Medicaid as outlined under the Affordable Care Act.

It remains unclear how far the administration will go to void other state policies they disagree with — even those that were supported under the Obama administration. For example, the Obama administration agreed to allow states to increase cost sharing, integrate account-style plans, and modify benefit packages in Medicaid based on categories of enrollees. Such flexibility may no longer be available to states moving forward and those states with existing waivers with such provisions may also be at risk of a receiving a termination notice.

By design, Medicaid waivers are intended to allow states to experiment with different approaches to the delivery of care. Rescinding existing waivers is inappropriate and should be reversed. These aggressive actions by the Biden administration are an attack on state experimentation and part of a broader effort to consolidate policy decisions in Washington and undermine state flexibility.

These unprecedented actions open Pandora’s Box and create uncertainty for all states moving forward. Such actions have chilling effect at the states level and only fuel concerns that this administration has set its sights on further paving the way for a more seamless transition to a full-blown single payer health care system.

What’s really needed is not a federal, one-size-fits-all model, but a more flexible Medicaid model that allows states to adapt their Medicaid programs to the diverse and changing needs of their citizens. This will also require addressing more fundamental challenges facing the program, including preserving eligibility for those in need, allowing benefits to match the needs of beneficiaries more precisely, and restructuring the financing to target resources and dollars more effectively.

We already know top-down, federal micro-management isn’t healthy. It’s time for a second opinion.

Nina Owcharenko Schaefer is a senior research fellow in health policy at The Heritage Foundation.

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Nina Owcharenko Schaefer is a senior research fellow in health policy at The Heritage Foundation.

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