Which States are Most Generous in their Medicaid Policies and Why

• In Event: Work and Waivers in Medicaid

Abstract

Introduction. Medicaid was adopted in 1965 as a means-tested, categorical eligibility program with responsibility for implementation delegated to the States. Consequently, anyone who has worked on Medicaid knows the expression “if you have seen one Medicaid program, you have seen one Medicaid program,” a reference to the significant variation in Medicaid programs across states. A program previously referred to as the “friendless stepchild of Medicare,” the Medicaid expansion precipitated by the Affordable Care Act (ACA) has survived multiple repeal and replace attempts, leading some to refer to this program as the new “third rail” in politics. In spite of the recognition of broad variation in policy implementation across states, we still have little understanding in regards to how states vary in their Medicaid programs and in particular which states are most generous in their Medicaid benefits. Recent studies have tended to focus on state decisions to expand Medicaid or not under the Affordable Care Act but few, if any, have examined broader trends in state-level Medicaid policy that affect eligibility criteria, administrative barriers to uptake and benefit generosity, many of which pre-date the ACA. Moreover, while there is a broad literature on social policy and redistributive politics, debate continues over which factors are more predictive of policy expansion and retrenchment. Debate continues over the role of left politics, political culture/public opinion, and race-ethnic heterogeneity in predicting program generosity.

Methods. This study reports the results of a longitudinal Index of State Medicaid Generosity measured along three dimensions (income eligibility limits, enrollment rules, and benefit levels) across all 50 states/DC and examines predictors of state Medicaid generosity. To develop the index, information on state Medicaid policy was derived from the Kaiser Family Foundation and compiled into a longitudinal dataset. Information on each state policy decision was coded such that a higher score represents a more generous Medicaid policy choice. All scores were summed and normalized on a 0-100 scale where 100 is equivalent to a state adopting the most generous allowable policies. The results were summarized into a decomposable index for the years 2000-2016 representing all variables that were measured both pre and post-ACA. The study first reports the findings of the State Medicaid Generosity Index and then examines predictors of generosity including state ideology (in terms of the composition of government), citizen ideology (measured in terms of public opinion on welfare), state poverty rates and race/ethnic composition using time-series analysis with two-way fixed effects.

Results. States vary widely in overall generosity and across all three dimensions. States have generally moved in the direction of having fewer enrollment rules and towards more generous eligibility levels even in states that did not expand Medicaid. However, states have remained largely unchanged in terms of covered benefits/copays. The most consistently generous states/localities between 2000-2016 across all categories were Washington DC, New Jersey and Connecticut while the consistently least generous were Texas, Utah and South Dakota. No state has adopted all of the possible policy reforms that would maximize eligibility levels, minimize administrative barriers to enrollment and provide all allowable benefits and eliminate copays. Having a democratic Governor predicted more Medicaid generosity, but not the ideological composition of the Assembly, nor citizen opinion on welfare. States that had more non-White residents had marginally higher generosity.

Discussion. States vary in their generosity across different dimensions and those that are most generous may not be the ones we expect. Moreover, while many researchers focus on the nature of changes in Medicaid occasioned by the ACA, this study shows that there are a variety of other policies that states have the authority to reform to increase coverage and benefit levels. More liberal ideology of political leaders rather than citizen ideology was predictive of greater generosity, particularly the party affiliation of the Governor. While studies have suggested that race-ethnic heterogeneity has a dampening effect on redistribution, we did not find that states that are more homogenous are more generous than other states; in fact, we found suggestive evidence of the opposite.

Conclusions. Medicaid has been getting more generous since 2000 across all states; however, both states that expanded Medicaid and those that failed to do so have room to reform to their eligibility, enrollment and benefit levels to improve uptake and increase the generosity of their Medicaid programs. In contrast with cash assistance programs like TANF, Medicaid may not be construed as “welfare” in the traditional sense resulting in different political dynamics.

Authors

• Ashley M Fox, University at Albany, Rockefeller College of Public Affairs and Policy

• Wenhui Feng, University at Albany, SUNY