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Healthcare Business News

Iowa gets limited permission to impose Medicaid premiums

By Virgil Dickson
Posted: December 10, 2013 - 7:45 pm ET

Iowa Gov. Terry Branstad won permission from the Obama administration for most of his alternative approach to expanding Medicaid, but it wasn't clear Tuesday whether the Republican governor would move forward without as much leeway as he wanted to impose premiums on lower-income beneficiaries.

The CMS approved a waiver paving the way for the state to buy coverage for as many as 100,000 adults earning up to 138% of the federal poverty level through the state's federally operated insurance exchange.

The federal government would cover 100% of the cost for the first three years, with that share dropping to no less than 90% in subsequent years.

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Arkansas received approval for a similar approach earlier this year. However, Iowa's waiver, though, also includes initiatives aimed at encouraging healthy behaviors among the new beneficiaries—and permission to impose premiums equaling as much as 2% of their annual income if they decline.

The CMS granted Iowa permission to charge premiums to those making more than 100% of the poverty level if they decline, for example, to submit to an annual health assessment by a primary-care physician. Branstad wanted the premiums to extend to people making as little as 50% of the poverty level—about $12,000 for a family of four.

Branstad’s office said his administration is continuing to discuss the premium contribution issue with the CMS and remains optimistic about being able to go forward with that approach.

“There's some concern as to what this action might mean from the governor's perspective,” said Greg Boattenhamer, senior vice president of government relations at the Iowa Hospital Association. “It's been clear there was a lot of interest in personal accountability for the beneficiaries and one way to do to that was premiums.”

Sen. Tom Harkin (D-Iowa) encouraged the governor to move forward. “As we know with all compromises, however, neither side gets everything they want—that's exactly what this is,” he said in a statement. “The two sides have spent many weeks negotiating—now is the time to move forward and give thousands of Iowans guaranteed access to dependable health care for the first time.”

CMS Administrator Marilyn Tavenner praised Iowa for “innovative, state-based solutions” and said the agency “stands ready to work with other states to explore options that aim to improve care and lower costs in the Medicaid program.”

The fact that the CMS approved a premium of any kind indeed shows the Obama administration is serious about giving states the flexibility required to get people covered, said Joan Alker, executive director of the Georgetown Center for Children and Families. Medicaid law prohibits premiums for beneficiaries earning less then 150% of the poverty level, and Alker said there is evidence that premiums deter low-income people from enrolling.

It also bodes well for the chances that the CMS and Pennsylvania will be able to reach some middle ground on the waiver proposal it submitted last week. The Pennsylvania plan also includes a request to charge premiums for those falling under 100% of the poverty level. However, Alker said she doubts the administration will go along with the request by Pennsylvania Gov. Tom Corbett's plan to require people to prove they are searching for employment.

Follow Virgil Dickson on Twitter: @MHvdickson

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