MO Voters Pass Medicaid Expansion; Will Other States Follow

August 7, 2020
MO Voters Pass Medicaid Expansion; Will Other States Follow

MO Voters Pass Medicaid Expansion; Will Other States Follow?

Reprinted with AIS Health permission from the Aug. 6, 2020, issue of RADAR on Medicare Advantage

Missouri voters on Aug. 4 approved a constitutional amendment to expand Medicaid coverage, reflecting a trend of ballot-driven expansion initiatives in recent years that has been accelerated by the COVID-19 pandemic. Missouri is the second conservative state to approve expansion during the pandemic; Oklahoma voters on June 30 narrowly approved a ballot measure to expand Medicaid in that state.

The ballot measure requires Missouri to expand Medicaid to adults between the ages of 19 and 65 with incomes up to 138% of the federal poverty level (FPL) by next July, leaving 12 states — mostly led by Republicans — that have not adopted expansion under the Affordable Care Act.

Jerry Vitti, founder and CEO of Healthcare Financial, Inc., a firm that connects low-income, elderly and disabled populations with public benefit programs, says he wasn’t surprised by the outcome “given that COVID is surging in Missouri and other states — I think that really argues well for states that have left it to the people via referendum.” The Washington Post on Aug. 3 reported that Missouri, Montana and Oklahoma were among the states seeing the greatest increase of infections over the past week.

Fifty-three percent of voters supported expansion of the MO HealthNet program despite opposition from Missouri’s Republican governor, Mike Parson, who moved the vote originally scheduled for the general election to the primary. At the time, Parson claimed that an earlier vote would allow the state to begin preparing for the potential cost of expansion, although one report estimating a cost savings associated with the expansion suggested that pent-up demand for health care services should be relatively low.

“In the context of COVID, you see the nonexpansion states getting hit really hard,” says Vitti. “And I think it accelerates the impulse to expand coverage because, first of all, it’s good for people, period. And folks with underlying conditions, social conditions and disparities are the most vulnerable, so with the spread of COVID there should be the realization that coverage is more important than ever.”

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“I’d also like to point out,” he continues, “that there’s still an epidemic with substance use disorder. It didn’t go away because of COVID, it’s exacerbated, but it’s not what we focus on now. So I don’t want that to get lost in the conversation and the importance of expansion for that population or other populations with underlying health conditions that could be either prevented or treated.”

Katherine Hempstead, Ph.D., a senior policy adviser with the Robert Wood Johnson Foundation, suggests that the pandemic has altered public opinion more favorably toward expanding Medicaid.

“I think that the pandemic has continued to shift the demand for coverage, which has been growing since the ACA, and [then] a lot of airing of the issues around repeal and replace [in 2017] made people more cognizant about the value of comprehensive coverage and preexisting condition protections,” Hempstead observes. “I think the pandemic acts as an accelerant because it makes people feel a little bit more vulnerable and further normalizes the use of Medicaid because more people can see themselves losing coverage because they’re losing their jobs.”

Moreover, the political sentiment that Medicaid isn’t an acceptable long-term solution to covering “able-bodied” adults “has been slowly eroded over time, and I think these ballot measures are showing that even in states that are pretty conservative, that’s not a majority view,” continues Hempstead. “Oklahoma, and now Missouri, is illustrative of that. In the context of the recession and the loss of employer coverage, the availability of this safety net becomes more important to the average voter.”

Absent ballot measures, however, how will states proceed? “Of the states that are left, I would be shocked if we’d get a legislative expansion of Medicaid during COVID. I’m not saying it can’t happen, but when you’re trying to close massive budget gaps, that 10% of the cost [that states must bear] is still a lot of money in real terms, particularly when you’re looking at more and more people eligible for Medicaid expansion if the economic effects of COVID drag on,” weighs in Chris Sloan, an associate principal with Avalere Health. And while providers are typically part of any major push for Medicaid expansion in a state, federal legislation allowing them to be reimbursed at Medicare rates for providing COVID-related care to uninsured individuals essentially “blunts what could have been a bigger push from providers,” he suggests. “But the same thing that I think makes it less likely that Medicaid is expanded through legislative means makes it more likely that these ballot measures pass.”

“It takes time and effort to get expansion on the ballot,” and not all states have the mechanisms in place to allow for ballot measures, Sloan says. Of those that do, there are different hurdles that advocates will have to overcome to get expansion on the ballot, such as requirements for a certain number of signatures, which may be difficult while adhering to social distancing guidelines, suggests Sloan.

“Advocates are getting better at this and are learning from some of the challenges they had in early ballot measure successes,” he adds, pointing to the notorious refusal of former Maine Governor Paul LePage (R) to expand Medicaid without adequate funding despite voters passing an expansion ballot measure. Advocates in Missouri, for example, included language adding expansion into the state’s constitution and prohibiting any additional restrictions or requirements (e.g., work requirements) for the expanded population to qualify for Medicaid coverage.

As states face an estimated $555 billion in budget shortfalls over the next three years and pandemic-related unemployment continues to rise, Congress as press time was still negotiating over a fourth legislative package to provide economic relief. But the Senate’s latest response did not include an increased federal match in Medicaid funding that health care trade groups and advocacy organizations have been calling for and was included in the HEROES Act (H.R. 6800) that passed the House in May. Congress is scheduled to adjourn on Aug. 7.

Both Hempstead and Vitti acknowledge that there are budgetary concerns that come with expansion but argue that the cost of uncompensated care and potential impact to hospitals — particularly rural ones that are in danger of closing — should be top considerations. “There’ve been quite a few studies not during the pandemic that have looked at the fiscal impact to states and the results have been good, and all the things the pandemic [has brought to light] in my mind sort of make it easier to pass Medicaid,” adds Hempstead.

Prior to the pandemic, a Washington University report estimated that expansion in Missouri could save the state about $39 million, assuming that the newly eligible population is slightly healthier and less expensive than the current adult population that is not aged, blind or disabled. Because Missouri did not expand Medicaid in 2014, “a large share of otherwise eligible people with slightly higher incomes (100% to 138% FPL) obtained highly subsidized coverage through health insurance marketplaces…and these people may now be better managing their health conditions or have less pent-up demand for health care services,” suggested the report. However, given Missouri’s relatively low eligibility levels for parents, the newly eligible population may contain a disproportionate share of “extremely low-income parents.” The report estimated that about 231,000 newly eligible adults and 40,500 children could be added to Medicaid as a result of expansion.

Meanwhile, after 54% of Nebraska voters in 2018 approved Medicaid expansion despite opposition from Gov. Pete Ricketts (R) and Republican lawmakers, the state is now preparing to enroll expansion adults into contracted plans. And Oklahoma, which must submit a state plan amendment and other necessary filings to CMS for expansion coverage to begin no later than July 1, 2021, has indicated it will seek to transition its SoonerCare Medicaid program to managed care. A request for proposals from managed care organizations is expected this fall.

“Medicaid expansion is a clear win for managed care entities. Some of that comes down to the capitation and the rates that states are going to pay,” says Sloan. But in states with large Medicaid populations like Florida and Texas, expansion represents a “pretty big boost to underlying MCO populations already in those states,” he adds.

Shifting the risk onto MCOs also injects more certainty into state budgets, says Vitti. “If you have an open-ended program without being able to manage the levers of cost, then you’re certainly more loathe to pass [expansion] in the first place, and it’s more difficult to manage the fiscal end of things for state governments, so it could be a good thing for managed care plans.”

View the Washington University report at https://bit.ly/30Whcfm.

Contact Hempstead at khempstead@rwjf.org, Sloan at csloan@avalere.com or Vitti via Joe Reblando at joe@joereblando.com.

 

By Lauren Flynn Kelly