Waivers allow states to test new ways of delivering care
Medicaid was launched in 1965 as a way for states to offer a “safety net” for the poor. Along the way, the federal government has developed guidelines designed to ensure that certain vulnerable populations receive health care (for example, children, pregnant women and the disabled).
But states also have some flexibility to experiment with new ways of delivering care.
“States are great innovators; there are very smart policymakers in each state who have ideas that might not have occurred anywhere else,” says Vern Smith, a managing principal with Health Management Associates and a former Medicaid director. “If you have the chance to try something at the state level, history shows that other states look at that and leapfrog to come up with something even more innovative.”
Section 1115 waivers have been used by states for decades to temporarily suspend certain Medicaid rules in order to experiment with new cost-saving measures or methods of providing care. These waivers generally need to be cost-neutral for the federal government and maintain coverage for mandatory populations.
Most states expanded their Medicaid programs under the Affordable Care Act by submitting state plan amendments, which don’t seek suspension of Medicaid rules. But five states — Arkansas, Iowa, Indiana, Michigan and Pennsylvania — designed state-specific expansions by submitting Section 1115 waivers.
Medicaid experts anticipate that these expansion models could lay the groundwork for new options that will be available in 2017 under the Affordable Care Act. Using Section 1332 waivers, states can seek approval to suspend certain elements of the health care law — as long as coverage levels stay the same and there is no additional cost to the federal government. States could take their federal Medicaid funding and use it in completely new ways, from designing a “single-payer” system (as Vermont is exploring) to eliminating the individual mandate or offering new types of plans in the state exchange.
Medicaid expansion in Midwest under Affordable Care Act