Gov. Little: feds ‘pulled the rug out from under us’ on rejecting Medicaid waiver

Aug. 29--One major piece of Idaho lawmakers' plan to alter Medicaid expansion was rejected by the federal government Thursday.

Idaho's Republican governor and legislative leaders said they were "disappointed and surprised" by the decision and accused the Trump administration -- specifically the Centers for Medicare and Medicaid Services -- for "pulling the rug out from under us."

Medicaid expansion was approved by voters in November. It allows low-income adults who don't currently qualify for Medicaid to become eligible for the state-run health insurance. It takes effect in January.

The Centers for Medicare and Medicaid Services, a federal agency within the U.S. Department of Health and Human Services, issued a letter to the Idaho Department of Insurance on Thursday, saying that it would reject the part of the plan that allows newly Medicaid-eligible Idahoans to buy private insurance instead, using federal tax credits.

"We are disappointed and surprised by the assessment ... after the amount of work and coordination Idaho spent with our federal partners in developing the application," said a joint statement issued by Gov. Brad Little, Senate Pro Tem Brent Hill, R-Rexburg, and House Speaker Scott Bedke, R-Oakley. "Simply put, CMS pulled the rug out from under us."

The letter said the state's waiver application for that piece of the plan was incomplete. But even with the missing elements, it still wouldn't be approved because it would cost the federal government too much, the letter said.

"Currently, the state's application ... contains no information to support a conclusion that the proposed (Medicaid expansion) waiver would not increase the federal deficit ..." it said, adding that it appeared "the federal cost of providing the exchange subsidies substantially exceeds the federal cost of Medicaid, which suggests that the (Medicaid) waiver would not meet the deficit neutrality requirement in this scenario."

State lawmakers passed a law in the 2019 session that ordered the state to submit waiver applications for a few different proposals, including work requirements.

"For months, state agencies worked closely with the federal agencies on the purpose and goals of the waiver application," the letter from Little, Bedke and Hill said. "We shared multiple strategies and considerations about how Idaho would approach the cost neutrality portion of the application. At no time during those conversations did the federal government indicate Idaho's approach to the budget neutrality guardrail would be insufficient for consideration."

They said the waiver "remains a high priority for Idaho" and the state "is already taking steps to submit the additional information required by CMS so that our application can be fully considered on its merits."

The supporters of this proposal -- which is separate from work requirements -- said it would give low-income Idahoans a choice between going on Medicaid and getting a private health insurance plan. They argued that it would save Idaho money, since those people would be getting insurance paid for by federal tax credits.

But observers and critics said it was problematic. They noted significant differences between private insurance and Medicaid, including the type of services covered and the difference in out-of-pocket costs.

This proposal was in the same vein as other states' plans to carve out sections of the Medicaid expansion population, but the Trump administration has shot down some of those proposals.

Messages to Idaho Department of Insurance Director Dean Cameron were not immediately returned.

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