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Sebelius Signal To States: Don’t Roll Back Medicaid Eligibility

Jul 11, 2012

The nation’s top health official signaled Tuesday that states should not try to use the Supreme Court’s  ruling on President Obama’s health care law to make it more difficult for low-income people to qualify for Medicaid.

Perry, Sebelius and Scott

While the Supreme Court upheld most provisions of the health law in its landmark ruling last month, the justices ruled that the federal government could not penalize states that choose not to expand Medicaid by cutting off all funding for existing Medicaid programs.

In a letter to the nation’s governors, Health and Human Services Secretary Kathleen Sebelius warned that “the court’s decision did not affect other provisions of the law” governing the joint federal-state health insurance program for the poor and disabled.

A White House official said that means states are still barred from reducing eligibility for Medicaid.

Some state officials in Maine and several other Republican-led states have seized on the court ruling as effectively invalidating another part of the law, which bars states from tightening Medicaid eligibility. That provision, first enacted in 2009 when the economic stimulus package boosted federal Medicaid dollars, was extended under the 2010 federal health law.

The state officials note the penalty for rolling back eligibility is the same one the high court found “coercive” if states fail to expand Medicaid – the loss of all federal funding for existing Medicaid programs. They say the ruling gives states the option to start cutting Medicaid immediately to save money.

Sebelius does not explicitly address that argument in her letter.

However, as a growing number of Republican governors express reservations about the Medicaid expansion,she said she is “hopeful” state leaders take advantage of the law’s “unusually generous federal resources” to broaden the program to cover everyone with incomes up to 133 percent of the federal poverty level. She noted the federal government will pay the entire cost for three years, from 2014 to 2017, and at least 90 percent after that.

At least seven Republican governors, including those in Florida and Texas, have said they won’t expand Medicaid under the health law because the long-term cost remains prohibitive.

Currently, the bill for Medicaid, which covers more than 60 million people, is split between states and the federal government, with the federal government paying 57 percent of expenses on average. It is the nation’s single largest insurance program.

If states choose not to expand Medicaid, Sebelius said their poorest citizens would be exempt from the health law’s provision requiring most Americans to have health insurance. She said people who are not financially eligible for the exemption could still get a “hardship” waiver as allowed by the law.

Sebelius also said she planned to hold meetings with state officials this summer “to address challenges and talk about how we will continue to move forward.”  The first meeting is slated for July 31 in Washington, D.C.

Sebelius’ letter comes a week after the National Governor’s Association raised several questions about the Medicaid expansion and the same day Republican governors sent her more than 13 questions about Medicaid stemming from the court decision.

Sebelius, who is scheduled to speak Wednesday at a health policy forum in Washington, left several questions unanswered, including whether states that opt not to set up online insurance exchanges will be permitted to cut Medicaid eligibility in 2014.

In recent months, the Obama administration has worked with several states, including Wisconsin and Illinois, to allow them to restrict eligibility for Medicaid, or make it harder to enroll, if they can prove they face a budget deficit.

Illinois last week, with federal approval, was able to remove more than 25,000 parents from its Medicaid program.

On July 1, Wisconsin added monthly Medicaid premiums for non-disabled, non-pregnant adults with incomes over 133 percent of the federal poverty. It also prohibited adults from signing up for Medicaid if they were offered “affordable” coverage from their employer. Affordable was defined as having premiums costing less than 9.5 percent of household income. The administration blocked Wisconsin from adding a Medicaid premium for children, a state Medicaid spokeswoman said.

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