NCPA - National Center for Policy Analysis

Medicaid Waivers' Role in Innovation

February 4, 2014

Medicaid waivers are largely responsible for the differences in Medicaid programs across states, says Stateline.

  • Medicaid programs have a lot of variation from state to state.
  • Federal-state dollar matching is one of the main variants, from a 73 percent federal to 27 percent state ratio in a poor state like Mississippi in fiscal 2013 to 50-50 for states such as California and Connecticut.

States are still tackling the question of whether to expand their Medicaid programs under the Affordable Care Act.

  • So far, 22 states have signed on to the expansion.
  • Those who do expand the program will see 100 percent of those expenses funded by the federal government through 2016.

The Department of Health and Human Services (HHS) can grant states Medicaid waivers, which allow the state to change its Medicaid program. States must conform to certain requirements, but they are allowed some flexibility in determining qualifications, health care delivery and covered services. For example, in the 1980s, Tennessee and Arizona both used waivers to transform Medicaid into a managed care system.

Iowa and Arkansas have both been granted waivers for the Medicaid expansion, Pennsylvania's waiver request is pending, and other states are still deciding whether to expand the programs. Those that do will likely seek waivers.

HHS has discretion over whether to approve the requests, and they require the programs to be revenue-neutral. The negotiation and approval process is cumbersome. Some have suggested that a quicker, easier process would lead more states to file for waivers to test out new innovations.

Source: Michael Ollove, "Medicaid Waivers' Role in Innovation, Coverage Expansion," Stateline, January 27, 2014.


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