Iowa’s Medicaid Expansion Has Lessons for Other States

The Department of Health and Human Services (HHS) last week approved Iowa’s proposal to adopt health reform’s Medicaid expansion through a pair of demonstration projects, often called “waivers.”  As a result, more than 100,000 uninsured Iowans will be newly eligible for health coverage starting January 1.

That’s great news.  HHS’s decision is important for other states because it suggests that federal officials will work with states to craft a reasonable expansion plan but won’t approve proposals — like one from Pennsylvania Governor Tom Corbett, described below — that would make it hard or nearly impossible for eligible people to get needed coverage.

Under Iowa’s plan, the state will use Medicaid funds to buy private coverage in health reform’s new marketplace for people with incomes between 100 and 133 percent of the poverty line.  After the first year, people in this income range will pay roughly the same premiums as if they were receiving premium tax credits to buy coverage themselves through the marketplace.  But people who complete a wellness exam and an assessment of their health risks won’t have to pay premiums; nor will people who suffer financial hardship.

While approving those parts of Iowa’s plan, HHS denied Iowa’s request to charge premiums to beneficiaries with incomes below the poverty line and to cancel their coverage if they miss payments.  This maintains the important principle that poor people shouldn’t face premiums for health coverage.  Research shows that premiums reduce participation in Medicaid and make it harder for people to maintain coverage.

The limits that HHS imposed on Iowa’s plan are especially important given recent news out of Pennsylvania.  There, Governor Corbett has proposed expanding Medicaid but with requirements that would make it hard for many low-income people to qualify.

The governor’s plan would require people with incomes as low as 50 percent of the poverty line ($5,745 a year) to pay premiums.  It also includes stringent work requirements that would likely make it very difficult for many people to get or maintain health coverage.  It would, for example, force a single mother with two kids who is working fewer than 20 hours a week to jump through a series of administrative hoops in order to gain and maintain coverage.

These parts of Pennsylvania’s proposal go beyond the appropriate flexibility that HHS has given states.  Governor Corbett should abandon them, if he wants to take advantage of health reform’s opportunity to bring coverage to hundreds of thousands of Pennsylvanians.