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Medicaid At Fifty: A Perspective

Thomas R. BarkerFoley Hoag, LLP

December 18, 2015

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Agenda Historical Background Key Timelines/Events The 1980s/1990s-era Medicaid Expansions Status Today Potentials for Reform

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Historical Background Medicaid (Social Security Act, title XIX) signed into law by President

Johnson July 30, 1965.‑ As part of the legislation that created Medicare‑ Public Law 89-97, 79 Stat. 286‑ 138 pages in total (Medicare and Medicaid)‑ 22 requirements imposed on State Medicaid plans (vs. 83 today)‑ Clearly an afterthought to Medicare; in his signing statement, President

Johnson barely mentioned the program (and not by name): He said that the bill will “end the injustice which denies the miracle of healing to the old and to the poor.”

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Some Key Timelines 1965: President Johnson signs Medicaid 1968: Social Security Act Amendments of 1967 becomes law

(expanded waiver authority) 1972: President Nixon signs legislation permitting states to link SSI

and Medicaid eligibility 1973: Expansion of IMD exclusion (children under age 21) 1977: HCFA created as separate agency 1981: OBRA’81 (DSH authority; Boren Amendment) 1982: Arizona is the last state to opt into Medicaid 1982: “Katie Beckett waivers” 1980s: Reagan-era budget bills gradually expanding Medicaid (See

slide 7)

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Some Key Timelines 1988: Medicare Catastrophic Coverage Act of 1988 signed into law by President

Reagan‑ Medicaid long-term care provisions

1989: Medicare Catastrophic Coverage Repeal Act of 1989 signed into law by President George H.W. Bush (Medicaid expansions retained)

1990: Medicaid prescription drug rebate program enacted 1990: Supreme Court decides Wilder v. Virginia Hospital Association

‑ Court concludes, on a 5-4 vote, that the Boren Amendment’s guarantee of payments to providers equal to costs of “efficiently and economically operated provider” can be enforced through the federal civil rights statute.

1995: President Clinton vetoes Medicaid block grant proposal 1996: Enactment of PRWORA (De-linking cash welfare and Medicaid;

Immigration 5-year bar) 1997: Enactment of BBA

‑ Repeal of Boren Amendment‑ Expanded use of managed care

1999: Supreme Court Olmstead decision (ADA requires provision of home and community based services)

2001: CMS is established

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Some Key Timelines 2003: Enactment of Medicare Part D

‑ Medicaid payment for outpatient prescription drugs for duals shifted to Medicare 2006: DRA enacted

‑ States granted more flexibility in charging cost sharing; states permitted to adopt “benchmark” plans in lieu of waivers.

2009: “Stimulus” enacted‑ Increase in FMAP

2010: ACA enacted‑ Medicaid expansion

2012: Supreme Court decides NFIB v. Sebelius‑ By 7-2 vote, Supreme Court rules that ACA Medicaid expansion is not compulsory

2012: Supreme Court decides Douglas v. Independent Living Centers of Southern California‑ By 5-4 vote, Supreme Court declines to decide whether Supremacy Clause can be

used to enforce § 1902(a)(30)(A) guarantee of “rates sufficient to enlist enough providers.”

2015: Supreme Court decides Armstrong v. Exceptional Child Center‑ By 5-4 vote, Supreme Court rules that Supremacy Clause cannot be used to enforce §

1902(a)(30)(A) but declines to decide whether Medicaid beneficiaries or providers have third-party rights to enforce Medicaid state plan requirements.

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The 1980s-1990s era Medicaid expansions

1984 (DEFRA): Links AFDC and Medicaid eligibility; expands Medicaid coverage to AFDC-eligible pregnant women

1986 (OBRA): Medicaid coverage of emergency treatment for individuals regardless of immigration status; State option to cover all low-income pregnant women and children; State option to pay Medicare premiums and cost-sharing for QMBs

1987 (OBRA): State option to cover pregnant women up to 185% FPL

1988 (MCCA): Mandatory coverage of pregnant women and children; expanded QMB

1989 (OBRA): Expanded EPSDT; requires coverage of FQHCs 1990 (OBRA): Mandated coverage of low-income children; SLMB

program

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Medicaid Today Largest health insurance program in the United States Largest payer for long-term care services Poor rates of payment to providers; access issues; crowding out

education, transportation, etc., spending in state budgets For non-elderly/non-disabled population, almost all care managed

through MCOs Waivers increasingly popular since 1990s but frustrations abound Entitlement to Medicaid and provider rights under Medicaid likely not

enforceable through the courts; only through CMS New Hepatitis C therapies focused attention on drug costs but also

proved that competition can work‑ But restrictive design of Medicaid makes it difficult to design alternative

payment arrangements in Medicaid and with private payers Limited delivery system reform (ACOs, bundled payments) options

in Medicaid; CMMI authority in Medicaid is extremely limited

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Potential Areas for Reform Devolving authority to states Liberalizing and consolidating multiple waiver authorities Simplifying drug rebate process and permit greater experimentation

in alternative payment models for drugs Increased delivery system reform options in Medicaid Address continued abuses in state financing techniques (provider

donations and taxes; UPL)