New Medicaid waiver style: Add to rolls but cut benefits

In an era of budget constraints, states such as Utah are encouraged to make trade-offs to expand their Medicaid coverage.

By Amy Snow Landa, AMNews staff. March 11, 2002.

Washington -- For the first time, a state has received federal approval to reduce benefits and increase cost-sharing for some of its current Medicaid enrollees to finance limited coverage for more people.

Utah was granted a federal waiver last month that will let the state offer scaled-down benefits under Medicaid to low-income, uninsured adults, and to pay for the expansion by cutting the benefit package for some people who are already enrolled.

The Utah waiver was approved under the Health Insurance Flexibility and Accountability initiative, a broad new Medicaid waiver policy announced by the Bush administration last August.

Illinois and Washington have submitted waiver applications that are pending approval. Several more states are considering applications. They include Alabama, Arkansas, Michigan, Missouri and Oregon.

The goal of the initiative "is to give states like Utah the flexibility they need to strengthen their Medicaid programs and extend coverage to more American families," said Health and Human Services Secretary Tommy Thompson.

But the new Medicaid waiver policy does not provide states with additional federal dollars. Rather, it allows states to expand coverage by using their unspent funds received through the State Children's Health Insurance Program or savings they are able to squeeze out of their Medicaid programs.

Arizona and California were granted waivers earlier this winter that allow them to use their unspent SCHIP funds to cover low-income adults. But Utah represents the first waiver approved under the initiative that allows a state to pay for expanding its Medicaid rolls through savings generated by reducing the benefit package of some enrollees. [...]