What does ACA decision mean for state Medicaid cuts?

Yes, the U.S. Supreme Court upheld most of the provisions of the Patient Protection and Affordable Care Act (ACA) that Americans seemed to be concerned about, but could its refusal to allow the federal government to withhold all Medicaid funding for states that opt out of the ACA's Medicaid expansion provisions mean that they don't have to comply with the ACA's maintenance of effort provision? Governor Le Page of Maine thinks so.

You see, under the ACA, state Medicaid plans may not adopt eligibility standards that are more restrictive than those in effect on the date that the ACA was enacted (March 23, 2010). This requirement is called the maintenance of effort, or MOE. States with budget deficits may limit the application of this requirement by certifying to the HHS Secretary that they have a deficit for the current fiscal year or are projected to have a deficit the following fiscal year. If they receive a waiver from the HHS, then the MOE will not apply to determinations of eligibility of adults who are neither pregnant nor disabled and whose incomes exceed 133 percent of the federal poverty level until January 1, 2014.
Governor Le Page was originally planning to obtain such a waiver, based on Maine's budget woes, but has recently proclaimed his belief that, based on the Court's recent decision, a waiver is unnecessary, which, for his purposes would be a good thing. A letter dated January 26, 2012, from the Centers for Medicare and Medicaid Services (CMS) to Rep. Margaret Rotundo, of the Maine House of Representatives stated that: "It is important to note that the Secretary’s authority under section 1115 of the Act to waive a provision of the law, including the MOE provision, is limited to 'experimental, pilot or demonstration projects' that are 'likely to assist in promoting the objectives' of Medicaid ... Reductions in eligibility solely for budgetary purposes would not be experimental, pilot or demonstration projects that further the purposes of the program."

In a recent session, Maine's legislature voted to eliminate Medicaid coverage for certain seniors and people with disabilities, for 19 and 20 year olds, and for parents with incomes between 100 percent and 133 percent of the Federal poverty Level (FPL). In a letter to HHS Secretary Kathleen Sebelius, Congresswoman from Maine Chellie Pingram, who has been quite vocal in her criticism of Le Page's planned Medicaid cuts stated:

"The Governor's stated reason for pursuing this waiver was to alleviate state budgetary pressures. As he never officially applied for such a waiver, CMS was unable to issue a definitive decision as to the validity of his request, but did respond to the inquiry of concerned state legislators by issuing clear guidance that these waivers were not intended for states to cut eligibility solely for budget-driven reasons." The HHS has not, to date, ever issued a MOE waiver.

Pingram requested reaffirmation of the ACA's MOE, and, in apparent response to this request, Sebelius issued a letter to the nation's governors stating that, aside from the fact that states may not lose all federal funding for existing Medicaid programs for choosing not to participate in the ACA's expansion of Medicaid, "The Court's decision did not affect other provisions of the law." It has been generally assumed by the media that this was Sebelius' way of complying with Pingram's request. It is certain that other governors will be watching the MOE issue in Maine closely.

For more information on the MOE, and for a comprehensive analysis of the ACA, along with additional information on health reform and other developments in employee benefits, just click here.