Feds approve Iowa Medicaid expansion plan; limits could be a lesson for Pa.

DES MOINES, Iowa - Federal authorities on Tuesday approved Iowa's proposal to expand low-income health care, but they aren't giving Gov. Terry Branstad as much flexibility as he sought to charge premiums on the very poor.

The announcement creates a political dilemma for the Republican governor, who has championed the use of premiums as a way to improve health outcomes in the state. Branstad did not immediately indicate Tuesday if he would accept the federal terms.

"I want to know the facts and see exactly what they're talking about here," said Branstad, who noted that lawmakers from both parties agreed to this plan in the spring. "I want to make sure what we do complies with the agreement we passed on a bipartisan basis with the Iowa Legislature."

A key part of the application that was rejected - premiums for residents beginning at 50 percent of the poverty level - is similar to what Gov. Corbett is proposing in his yet-to-be submitted waiver for a private-market version of Medicaid expansion. Other parts of the Corbett plan that some health policy analysts have said could be sticking points for the Obama administration, such as a work-search requirement, were not requested by Iowa or Arkansas, the two states that are pursuing an alternative to expansion using federal Medicaid funds.

Iowa now has 30 days to accept the terms, which would provide the state with full funding for the program in 2014, 2015 and 2016. Officials from the Centers for Medicare and Medicaid Service said Iowa's request was granted with "virtually all the initiatives the state has proposed."

"Iowa has pioneered innovative, state-based solutions for Medicaid expansion, and we are pleased to grant this waiver," said CMS administrator Marilyn Tavenner in a news release. "CMS stands ready to work with other states to explore options that aim to improve care and lower costs in the Medicaid program."

If officials can't reach a deal, tens of thousands of Iowans will be impacted. More than 50,000 Iowa residents are already signed up for the Iowa Health and Wellness plan, all of whom are currently on a different low-income health program set to expire at the end of the year. Thousands more have applied for state coverage and may be eligible for this plan.

Iowa sought a waiver enabling the state to receive more federal Medicaid money for the proposed Iowa Health and Wellness Plan, a new health insurance program which would cover up to 150,000 residents not on the current Medicaid plan. The plan is scheduled to start providing coverage Jan. 1.

Under the Iowa plan, which was granted bipartisan approval by lawmakers in May and submitted to federal officials in August, those with incomes up to 100 percent of the poverty line - under about $24,000 annually for a family of four - would go on a new state-run health plan with benefits similar to those offered to state workers. People with incomes from 101 to 138 percent of the poverty line - between about $24,000 and $32,000 annually for a family of four- would get private health plans on the new health care exchanges; those premiums would be paid for with the federal dollars.

The state wanted to charge small monthly premiums to those with incomes over half of the federal poverty line starting in 2015; Gov Corbett's proposal for Pennsylvania, released last week, also seeks to charge premiums beginning at 50 percent of poverty.

Federal officials said Iowa could only charge those with incomes above 100 percent of poverty. The premiums would be waived if people meet certain health goals and the out-of-pocket costs could not exceed five percent of their annual income.

Charging those fees to the very poor was reportedly a sticking point in the negotiations with federal authorities. But Branstad has insisted they are a key part of the plan.

"The whole difference in our approach is we want people to take some ownership of their own health," Branstad said Tuesday.

Democratic lawmakers hailed the approval Tuesday, calling it a major step forward for health care access in the state and urging Branstad to accept the deal.

"The result will be healthier Iowans, fewer home foreclosures and family bankruptcies due to medical bills, and lower health care costs for all Iowans," said Democratic Senate President Pam Jochum in a statement.