ADEA State Update

Medicaid Expansion Update - July 2014

(State Policy, Medicare and Medicaid, ACA) Permanent link   All Posts

State legislatures across the country are continuing to debate Medicaid expansion under the Affordable Care Act (ACA). Below is a brief summary of policy updates in Indiana, Montana, Utah and Virginia.


On May 15, Gov. Mike Pence (R-IN) announced his plan to advance private, market-based Medicaid reforms in the state. Specifically, Gov. Pence unveiled his Healthy Indiana Plan (HIP) 2.0, which will allow for the removal of annual and lifetime limits and provide maternity coverage. HIP 2.0 includes several different health plans. The HIP 2.0 Basic plan requires co-pays for all services and does not cover dental or vision services for non-disabled adults. However, HIP 2.0 does include an option for persons ages 19 to 64 with incomes up to 133% of the federal poverty level to contribute to their Personal Wellness and Responsibility (POWER) account by rewarding those who contribute with access to the HIP 2.0 Plus plan.[1] The HIP 2.0 Plus plan is an enhanced benefit plan which covers dental and vision care. Additionally, the HIP 2.0 Plus plan does not require a co-pay except for non-emergency emergency department visits.

To receive federal approval for HIP 2.0, the state must formally submit an 1115 waiver application to the U.S. Department of Health and Human Services (HHS). On July 1, Gov. Pence submitted a formal 1115 demonstration waiver application to HHS detailing his request to expand HIP 2.0. According to senior officials in the Indiana Family and Social Services Administration (FSSA), the waiver application includes a limited dental package similar to current Medicaid benefits with some modifications; however reimbursement will be at Medicare rates. FSSA continues to work on details regarding dental coverage and will provide additional information in a state plan amendment later this fall. 


Gov. Steve Bullock (D-MT) has been quite outspoken about his support for expanding Medicaid in the state. However, in 2013, the state legislature failed to support legislation to expand the program. As a result, the Healthy Montana Initiative attempted to gather enough signatures to put the issue of Medicaid expansion on the November ballot. Their efforts failed. The volunteers collected about 25,000 unverified signatures by the deadline, but needed about 32,000 raw signatures to ensure the ballot measure qualified; this is because generally, about 30% of the raw signatures collected turn out to be invalid. Gov. Bullock intends to continue pushing for Medicaid expansion in Montana, despite the unsuccessful ballot effort and the fact that he is precluded from expanding Medicaid through Executive Order.


Gov. Gary Herbert (R-UT) recently met with the new Secretary of HHS, Sylvia Mathews Burwell, to discuss his alternative plan to traditional Medicaid expansion.

Alternative Medicaid expansion plans, such as the Healthy Utah Plan, require federal approval of an 1115 waiver before the plans may be implemented. The Healthy Utah Plan, if approved, would allow the state to use a block grant to support a three-year pilot program.

During the proposed three-year pilot program, the state would use the block grant funds to provide help to Utahans who make under $15,500 a year. The Healthy Utah Plan would provide assistance to pay for health insurance in private markets. The exact amount of assistance would depend on four factors:

  • Ability to work,
  • Household income,
  • Access to employer or family health insurance, and
  • Individual health care needs.

All participants in Healthy Utah would have to make co-payments to help pay for the cost of their care. In addition, parents with children on Medicaid would have the option to put their entire family on private insurance plans. Gov. Herbert’s plan also includes a work requirement which has generated some controversy.


Gov. Terry McAuliffe (D-VA) called a special session which began in March to tackle the state budget and Medicaid expansion.  On June 12, the Virginia General Assembly approved H.B. 5002, the biennial budget for FY15 and FY16. Gov. McAuliffe signed the bill, but issued eight line item vetoes, including vetoing a provision prohibiting any appropriation in the budget being used to pay for the costs of an expansion of Medicaid pursuant to the Affordable Care Act. According to the governor, this [provision] prohibits even the Medicaid Innovation and Reform Commission (MIRC) from approving an expansion in accordance with existing law approved in the 2013 Session. The governor went on to state, “I have vetoed this language because it is unnecessary given that there is no appropriation for expanded Medicaid pursuant to the Affordable Care Act. The language simply restricted something that doesn’t exist.”

On June 23, Speaker of the House Del. Bill Howell (R-VA) unilaterally rejected two of the governor’s eight line item vetoes, including the governor’s veto of the Medicaid expansion provision. Specifically, a point of order was raised on two of the eight line item vetoes and Speaker Howell ruled the two governor’s vetoes out of order. Under the normal legislative process, the full House of Delegates would vote on whether to accept the governor’s vetoes.[2] As a result of the speaker’s unilateral ruling, the provision prohibiting any appropriation in the budget being used to pay for the costs of an expansion of Medicaid pursuant to the Affordable Care Act stands. The speaker stated that the line item veto of the Medicaid expansion provision was unconstitutional. Specifically, the speaker noted that “in multiple instances, the Supreme Court of Virginia has defined an item as ‘an indivisible sum of money dedicated to a stated purpose‘ and added that the governor cannot veto conditions or restrictions without also vetoing the appropriation. The court has also stated unequivocally that the governor may not veto part of an item.”

Gov. McAuliffe does not appear to be dissuaded by the actions of Speaker Howell. The governor has asked Health and Human Resources Secretary William Hazel, Jr., M.D. to develop an action plan for the state to utilize to move ahead with Medicaid expansion despite recent setbacks.   

[1] The POWER Account is modeled after a Health Savings Account from which members would pay for medical services.

[2] According to the Virginia General Assembly website, under the normal budget process, the governor reviews the budget bill passed by the General Assembly. He/she may sign it, veto the entire bill or certain line items or recommend amendments. If the governor vetoes the bill or any items of the bill, it goes back to the General Assembly during the reconvened session. If the governor recommends amendments, the bill is returned to the reconvened session for consideration and action by the General Assembly on the governor’s proposed amendments.

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