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1. Eligibility Reform Option

Under federal health care reform, it is possible that the administration will propose that Medicaid (or a similar public program) serve as the means to cover all citizens, nationals, and immigrants with satisfactory immigration status whose income is below the federal poverty level (FPL).  If such a proposal is advanced, it is likely there would be a maintenance of effort requirement.  Some states could be required to provide coverage to populations that they do not currently cover under Medicaid, and states that have already expanded eligibility could be required to maintain those expansions.  This expansion could include Medicaid coverage for childless adults.  

There are many unknowns associated with health reform at the federal level, including the degree of flexibility states will have in defining income and resource standards, as well as benefit packages, under Medicaid moving forward.  Further, it is unclear how the funding split between the federal and state governments will work and how current non-federal funding for this coverage will be considered. The key implication for California and other states considering implementing reforms through a waiver vehicle is that many health reform proposal elements could render waivers unnecessary as many of the wavier expansions could presumably be done under a new Medicaid state plan amendment.   Furthermore, it is not known how waivers will factor into any maintenance of effort requirements.  For example, under the CHIP program, states were not allowed to reduce their children’s coverage under Medicaid nor get CHIP funding for any expansions that they had already enacted.  Under federal welfare reform, states were prohibited from decreasing their eligibility for the Section 1931(b) Medicaid program to levels below their 1996 coverage.  Also unknown are what federal matching rates will be provided for any required expansions.  It is possible, as in CHIP reform, that states will receive their regular matching rates for what they cover now and an enhanced rate only for what is covered under the federal expansion.  

It is important that California consider how it might align itself to the likely national health care reform, and how health reform might impact both the need and structure of a waiver for an expansion of eligibility.  Since the funding ratios and maintenance of effort requirements are unknown, the state will not want to get into a situation where entering into the waiver is disadvantageous.  For example, the waiver could provide that in the event of health care reform budget waiver neutrality and the type(s) of waiver spending would be revisited.  Also the waiver could be designed that it would not affect any maintenance of effort requirements placed on the State.  

It is possible that the nature of national health care reform will be much clearer by the time the State submits a waiver concept paper.  

Current Status of California

Like many states, there are different eligibility levels for California’s public coverage programs depending on upon the population “bucket” (or eligibility category) into which an individual fits.  Medi-Cal currently covers families and children up to 100 percent of the FPL, as well as seniors, persons with disabilities, some children, pregnant women, people with breast and cervical

Health Management Associates/Harbage ConsultingPage 11

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