Is Iowa trying to fashion a partial expansion?

by Adrianna McIntyre and Karan Chhabra

If you want a break from Arkansas, you’re in luck: we think it’s time to talk about Iowa, whose governor has been promoting a plan to decline federal funds for Medicaid expansion, and instead enroll low-income adults into a homegrown program called Healthy Iowa:

Dubbed The Healthy Iowa Plan, Branstad’s proposal covers roughly 89,000 uninsured Iowans, while Medicaid expansion is estimated to cover 150,000 uninsured Iowans. Branstad’s plan also costs tens of millions more for the state than Medicaid expansion would.

But the plan is a better deal for Iowans in the long run because there’s no way the federal government is going to follow through the obligations it made under voluntary Medicaid expansion, the governor said.

Essentially the logic is this: since the federal government won’t be able to afford the promises it’s made to help states expand Medicaid, Gov. Terry Branstad would rather not rely on the feds at all. Instead, the plan is to apply expand the Medicaid program to include Iowans up to 100% of the federal poverty line; ostensibly the 100-133% FPL population would be shuttled into the exchanges. Although the governor doesn’t plan to take the enhanced federal match rates associated with the Affordable Care Act, this still looks suspiciously like a partial expansion.

FMAPA few quick responses. First, (and Adrianna argued this last month), there’s no precedent whatsoever for the federal government to cut and run on its obligations to match states’ Medicaid funding. The big bump you see there is when the government temporarily increased money flowing to states during the recession starting in 2008; it was written to be a temporary form of relief. The federal match rate, with the exception of that blip, has hovered steadily around 57% since Medicaid was enacted. The experience of individual states has fluctuated more, because match rates are tied to economic indicators—struggling states get more support—but that’s five decades of overall consistency, for whoever’s keeping score.

Screen Shot 2013-04-10 at 2.08.54 PMThere’s another detail that’s worth pointing out in the face of claims about the fed’s purported inability to sustain the Medicaid expansion: it’s a big boost in Medicaid spending to be sure, but we’re not talking about, say, doubling the size of the program. Under the expansion, federal expenditures are expected to increase by about 26%; overall, the expansion will result in program costs rising about 16% over baseline Medicaid projections. (via KFF)  

There’s a normative debate that people can have over the proper role and scope of public insurance programs like Medicaid—listen this discussion between Ezra Klein and Ben Domenech if you want to hear it—but that’s not the line that Branstad is pushing. Healthy Iowa still expands Medicaid, but would cost the state more money to cover fewer people.

And it’s unclear where that  additional funding would come from. The governor’s plan is said to rely on $225 million in federal match funds. If that’s outside the scope of Iowa’s normal match rates, the state would need a waiver of some kind—the notion that HHS would approve a plan that covers fewer people at higher cost leaves us highly skeptical. And let’s not forget the recent memo; partial expansions are not perceived favorably by the Administration.

Branstad wants beneficiaries to pay a nominal premium—something like $10 a month—which runs into problems with cost-sharing under the Medicaid statute, but we’ll leave that aside for the moment. Consider the following:

The Healthy Iowa Plan requires that everybody pay at least something for their health care coverage, but people who fall below the poverty line could have those payments waived if they take part in services such as health assessments and annual physicals. Iowans above the poverty level can receive tax credits to subsidize purchasing private health insurance.

Branstad said it’s set up this way so people have “skin in the game” by paying for their health care. He likened it to being at a wedding with an open bar and or a cash bar, where “there’s going to be a lot more liquor consumed with an open bar.”

We’ll spare you the empirical problems with comparing open-bar weddings with costly illness (one seems significantly more fun than the other). But where’s the evidence to support requiring health assessments and annual physicals? I don’t know what they mean by “health assessments,” but we have solid evidence that annual physicals don’t benefit healthy people. Financially incentivizing checkups might make for an interesting policy experiment, but it’s not evidence-based policy.

Iowa’s legislative session is scheduled to end in four weeks, but state Democrats have said they won’t adjourn until a Medicaid expansion under the ACA is approved. You can bet we’ll be watching.

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Adrianna works in clinical research and is a graduate student in public policy & public health at the University of Michigan. Follow her on Twitter @onceuponA.

Karan is a first-year student at Robert Wood Johnson Medical School and Duke graduate who previously worked in strategic research for hospital executives. Follow him on Twitter @KRChhabra.

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One thought on “Is Iowa trying to fashion a partial expansion?

  1. Mark Regan says:

    Typo of the week, from the Sioux City Journal article you linked to:

    Sen. Mary Jo Wilhelm, D-Cresco, who preciously has criticized Branstad’s opposition to Medicaid expansion, took to the Senate floor Monday to call the governor’s plan “no plan at all.”

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