Expansion of Medicaid Eligibility for Undocumented Young Adults
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Expansion of Medicaid Eligibility for Undocumented Young Adults

Brownstein Client Alert, February 26, 2019

In recent weeks, the states of California and Washington, and New York City have proposed expanding Medicaid eligibility for undocumented young adults. Given Medicaid’s combination of state and federal funding, House and Senate Republicans have raised concerns that these states may inappropriately use federal funds to subsidize their state programs as a way to offset the cost of expanding and providing health benefits to undocumented immigrants. Federal responses focus on the use of federal oversight, which could potentially influence how states run their Medicaid programs.

Recap of California Proposal and Background:

  • Gov. Gavin Newsom’s (D-CA) proposal to expand Medicaid (Medi-Cal in California) eligibility would, if enacted, make it the first U.S. state to provide full-scope health benefits to low-income undocumented young adults up to age 26 beginning July 1, 2019.
  • California has sought the same kind of expanded Medi-Cal eligibility numerous times in recent years, though none of the attempts made it through the legislature; former Gov. Jerry Brown blocked a similar attempt to include funding for the expansion in the 2018-19 budget.
  • Gov. Newsom’s budget proposal, released Jan. 10, includes $260 million for the expansion in California and would cover roughly 138,000 individuals.
  • While California provides Medi-Cal coverage to undocumented children, the proposal would use state funds to extend coverage to low-income young adults regardless of immigration status by raising the age threshold from 19 to 26.
  • Federal funds provided to states come with various restrictions on how these dollars can be spent. There are also limits on the federal government’s ability to interfere with a state’s expenditure of its own funds.
  • Under federal law, there is a five-year waiting period for documented immigrants before they become eligible for Medicaid and Children’s Health Insurance Program (CHIP) benefits. States, under certain circumstances, are permitted to waive this waiting period for children and pregnant women, resulting in varied coverage among states. California waives this waiting period.
  • Of note: California is one of six states in addition to the District of Columbia that already provides Medi-Cal coverage for children regardless of their immigration status.

Recap of Washington State Proposal and Background:

  • Currently, all children and families in Washington state with incomes of $26,000 or below are eligible for Apple Health (Washington’s Medicaid) insurance until they turn 19, at which point they can transition to coverage through their parents’ plans until they turn 26. This does not apply to undocumented young adults as they are ineligible for Medicaid.
  • HB 1697, introduced by Rep. Nicole Macri (D) on Jan. 28 and referred to the House Health & Wellness Committee, and companion SB 5814 introduced on Feb. 6 aim to extend eligibility for Apple Health to all low-income young adults, regardless of immigration status.
  • Coverage shall be provided to individuals who:
    • Are between ages 19 and 26;
    • Have income that is at or below 133 percent of the federal poverty level;
    • Are not incarcerated; and
    • Are not eligible for categorically needy medical assistance, as defined in the SS Title XIX state plan.
  • The bill was co-sponsored by 14 other legislators, all of whom are Democrats.
  • Rep. Macri is optimistic that the bill will get a hearing in the House Health Care & Wellness Committee before the Feb. 22 policy cutoff, though she is less optimistic that it will subsequently get a hearing in the Appropriations Committee.
  • The estimated cost of the program is between $20 million and $30 million per year.
  • If the bill passes, Washington would be among the first states to extend health coverage to this population.

Recap of NYC Program and Background:

  • Today, about 600,000 New York City residents, about half of whom are undocumented immigrants, are without insurance because they cannot enroll.
  • On Jan. 8, New York City Mayor Bill de Blasio announced a program called NYC Care that would provide coverage to all New York City residents, regardless of ability to pay or immigration status.
  • The impetus for this plan is a funding crisis in the city; in 2017, the city budget office reported that public hospitals were facing a $6 billion shortfall through 2020.
  • NYC Care will launch in the summer of 2019 and will roll out geographically, beginning in the Bronx. It will be fully available to all New York City residents in 2021.
  • The program will cost at least $100 million annually when it is fully scaled.
  • All services will be provided on a sliding-cost scale, to include NYC Health + Hospitals’ physicians, pharmacies, and mental health and substance abuse services.
  • In addition, the city will double down on efforts to boost enrollment in MetroPlus, the city’s public option.

Senate Response: On Jan. 15, Sen. Bill Senator Bill Cassidy (R-LA) introduced S. 131; The Protect Medicaid Act, which would oversee the separation of federal and state of federal and state funds. Specifically, the bill would:

  • Amend the Social Security Act to prohibit federal Medicaid funding for the administrative costs for providing health benefits to individuals who are unauthorized immigrants.
  • Require a report from the Department of Health and Human Services Office of Inspector General (OIG) to include:
    • An explanation of how states separate funding for undocumented Medicaid recipients vs. all other participants.
    • A description of the procedures states employ to ensure they are in compliance with federal law.
    • A description of states’ methods of financing Medicaid programs that provide health benefits to undocumented immigrants.
  • Bill cosponsors include Sens. Barrasso (R-WY), Blackburn (R-TN), Hyde-Smith (R-MS), Inhofe (R-OK), Perdue (R-GA) and Wicker (R-MS).

House Response: On Jan. 23, House Oversight Committee Ranking Member Jim Jordan (R-OH) and House Freedom Caucus Co-chair Mark Meadows (R-NC) sent a letter to the CMS to examine potential “integrity” problems with how certain Medicaid managed care plans are run.

  • The letter highlights a recent state audit by California’s Department of Health Care Services (DHCS) that found that the department made nearly $4 billion in “questionable” Medi-Cal payments between 2014–2017.
  • Among the requests outlined in the letter, Reps. Jordan and Meadows asked that CMS identify recent steps taken by the agency to strengthen program integrity in Medicaid managed care, including a description and account of the steps CMS has taken or plans to take to improve its oversight over California’s Medicaid program.

Current Outlook:

  • Even if S. 131 were to pass the Senate, the bill is unlikely to gain traction in the Democrat-controlled House.
  • It is anticipated that additional federal Medicaid oversight efforts may surface from Republican members in the upcoming months to discourage states from similar expansion proposals.
  • If enacted, California’s proposed expansion of Medi-Cal eligibility may face enrollment difficulties given the broad and recent changes in federal immigration policy and the current political climate in D.C. on immigration issues.
  • As previously reported, the Trump administration’s “public charge” proposed rule has led to reported heightened enrollment fears among otherwise eligible immigrants, which is anticipated to drive down enrollment by millions of people in Medicaid and the Children’s Health Insurance Program (CHIP).

This document is intended to provide you with general information about Medicaid expansion proposals. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

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