The first hint of a change came in mid-July, when DHHS officials quietly informed states with pending applications to expand Medicaid eligibility for family planning that their proposals would not be approved. At the same time, states with existing waiver programs—so-called because they technically waive certain requirements set out in the Medicaid statute—were told their programs, which had been authorized for five years, would not be renewed. When the media picked up the story that a Bush administration retreat on family planning support was underway, DHHS officials argued that the moves were not targeted at family planning but were part of a broader strategy to promote waivers offering at least a limited package of primary care benefits rather than "single-service" waivers—a policy shift many states quickly said would make expansions prohibitively expensive.
Since the first of these waivers was approved in 1993, 14 states have obtained approval to extend eligibility for family planning services to populations that would otherwise not be eligible ("California Program Shows Benefits of Expanding Family Planning Eligibility," TGR, October 2000). Generally, the programs cover women for two years postpartum or women (and in some cases men) based solely on having a low income that is nonetheless too high for regular Medicaid eligibility. Data collected by The Alan Guttmacher Institute indicate that these programs serve at least 1.3 million enrollees a year.
Reaction was swift. Within days, a bipartisan group of members of Congress sent a letter to Thompson asking DHHS to reconsider. In addition, Sen. Lincoln Chafee (R-RI) and Rep. Nita M. Lowey (D-NY), along with 23 of their colleagues, introduced legislation to allow states to implement family planning expansion programs without first having to obtain DHHS permission.
Meanwhile, Thompson was moving along a seemingly separate track to carry out a long-standing promise to expand governors' latitude over their overall Medicaid efforts. When he unveiled the administration's major new Medicaid initiative on August 4, however, the two issues were joined.
Along with increasing state flexibility, the initiative, according to the administration, is targeted at reducing the number of people in the United States with no source of insurance coverage. To accomplish that goal, states will be able to expand their Medicaid programs, but only in a way that will not increase costs to the federal government. To meet this requirement, states will have to trim the benefits covered or increase the amount enrollees have to pay out of pocket for their care. Significantly, however, the initiative does not require that states use any savings accrued from trimming benefits to expand eligibility, leading many advocates to question the extent to which the plan will result in increased coverage for the uninsured.
Current Medicaid law requires states to cover three categories of individuals, each at different income levels: indigent parents (up to regular, state-set ceilings that are as low as 15% of the federal poverty level), pregnant women (up to 133%) and children (up to 133% for children through age 5 and up to 100% for children 6-18). States are permitted to cover individuals in these same categories who have slightly higher incomes. It is individuals in this so-called optional group—which also includes children eligible for the State Children's Health Insurance Program—who are most likely to be affected by the administration's policy. Breaking with the bedrock Medicaid principle of "comparability," states will be allowed to offer optional enrollees a more meager benefit package than they provide to their mandatory enrollees. States, for example, may choose to increase cost-sharing requirements for optional enrollees and/or trim services, including family planning, from their benefit packages.
States are encouraged to use the savings accrued from the optional-enrollee group to extend Medicaid enrollment to a new, third group of people. The policy calls on states to submit requests for waivers that would provide an undefined but presumably quite limited package of "primary care services" to low-income individuals who would otherwise not be eligible for Medicaid under either of the other two categories. The creation of this new group of potential Medicaid enrollees effectively is the formal articulation of the administration's earlier policy shift on "single-service" family planning waivers.
Meanwhile, seemingly feeling the heat for that shift, DHHS has very publicly informed several states that it fully intends to approve their family planning waiver requests. Significantly, however, reports conflict about whether those waivers will be approved just for the set of preventive services, such as blood pressure screenings, STD services and Pap tests, that along with contraception are provided under the rubric of "family planning" or whether the administration will still require the inclusion of additional primary care services. About all that is clear at this point is that this controversy will continue to play itself out over the coming weeks and months.