The federal government’s surprise move against Georgia

In a raw political move, the Centers for Medicaid & Medicare Services (CMS) removed the approval of Georgia’s Pathways to Coverage, labeling the program as “pending.” 

Despite the fact that the COVID-19 vaccine rollout is consuming the resources and attention of the Governor’s office and the Department of Community Health, CMS gave Georgia only 30 days to respond before the federal government might eviscerate the program. In its February 12 letter, CMS targeted the program’s work or other community engagement components and also threatened “review” of other provisions of the program. 

This move by the new administration in Washington, D.C., appears to be unprecedented. Finally secured last fall, the approval was part of an administrative process, which included time for public comments, that took years to develop. 

Pathways to Coverage serves non-disabled adults below the poverty line. It is a critical component of Georgia’s plan to reduce the number of uninsured and make healthcare coverage more affordable, without sacrificing quality of care or causing other serious drawbacks associated with a traditional Medicaid expansion. It is based on the idea of not keeping these adults below the poverty line but moving them above it. 

The Success Sequence provides an outline of how to reverse the cycle of poverty in our communities. GCO uses this as a framework for much of our work.

Let’s focus on helping people instead

Pathways to Coverage is really about helping people. Readers might want to check out my prior blog on this program as well as some of our published research on fixing the healthcare system.

The so-called Affordable Care Act (ACA) has caused havoc for Georgians when it comes to healthcare coverage and costs. The rate of healthcare price increases did not abate but accelerated. As we reported before, our own data analysis confirmed other research by showing that for individual markets, “Georgians suffered average price increases of 70.7% for Bronze plans, 77.3% for Silver plans, and 70.4% for Gold plans” over five years.

We also found that prior to the ACA, the median cost for a health insurance plan on the individual market for a family of four was $5,386 per year. But within six years, the cost varied from $17,550 to $26,081, depending on the level of the plan. 

The bulk of Georgia’s uninsured problem lies not below the poverty line, but above it. Therefore, Pathways to Coverage necessarily links to Georgia’s Reinsurance Program designed to drive down costs in the individual markets. The test of the demonstration project will be to see how well Georgia can move people out of poverty into situations where they have better opportunities and more resources for health coverage, such as coverage through affordable individual markets or, better yet, employer-based coverage. 

America has one of the world’s best and most innovative healthcare systems, if you have insurance to afford it. By far, employer-based and private insurance provides the best coverage. Medicaid has among the worst healthcare outcomes, can trap families in poverty (as we and others have demonstrated), and can be an obstacle in moving to the much-better private coverage. Incentivizing people to improve their circumstances is an important strategy that this demonstration project hopes to prove. 

The Spirit of the Law

The new administration in Washington might feel like they are doing the right thing by attempting to strongarm states like Georgia into Medicaid expansion. However, this action raises concerns. 

First, the question of whether the federal government can mandate states to expand Medicaid was already settled in the negative by a seven-to-two U.S. Supreme Court ruling. Second, removing a critical component of this demonstration project will not likely accomplish expansion but, if followed through, will compromise the effectiveness of the project. Third, it goes against the whole purpose of demonstration projects. 

Pathways to Coverage is an approved—and hopefully remains so—Section 1115 waiver to Medicaid rules, which is found in the Social Security Act. In enacting this section of the law, Congress acknowledged that a one-size-fits-all approach dictated by the federal government is not always the best way to solve our public policy challenges. 

Congress acknowledged this principle again when it enacted Section 1332 of the Affordable Care Act that allows states to come up with alternative plans in coordination with Section 1115 waivers. Georgia took advantage of both these provisions of law in developing its healthcare strategy. 

Finally, demonstration projects allow states to experiment with what works best. Without experimentation, we hinder our ability to discover better ways to run public programs for the benefit of people. 

What’s next

The best overall resolution would be for CMS to reinstate the approval and allow the demonstration to move forward. CMS will monitor the project, of course, but it must let it play out to see if the project will demonstrate a better way. Georgia has a vested interest in making it work. If not, Georgia could choose to modify or abandon the project. Besides, the federal government will have the opportunity to review the results when the waiver comes up for renewal.

Failure to reinstate the approval will likely result in a legal struggle before the courts. Who knows how long such a legal process will take? Instead of using our resources and time to bicker before the courts, we should apply them to seek out the best ways to improve people’s lives. 

*Erik Randolph is Director of Research at the Georgia Center for Opportunity. This blog reflects his opinion and not necessarily that of the Georgia Center for Opportunity.