by Phil Galewitz, KFF Health News
About 200,000 low-income Arkansans could see major changes to their health coverage next year after the Trump administration recently informed state officials it will not renew a key Medicaid agreement with the federal government.
The decision by federal officials, citing authority granted under President Donald Trump’s signature tax-and-spending law, suggests the GOP-led state’s predicament could foreshadow repercussions in how other states are allowed to run their Medicaid programs under federal waivers.
Nearly every state has at least one waiver to run its Medicaid program differently than required by federal law, such as allowing the use of private managed-care plans or expanding eligibility for mental health or long-term care services. Some Medicaid waivers have stretched for decades, renewed by presidential administrations of both parties, effectively making the demonstration programs they created permanent.
Arkansas is one of a dozen states with a waiver expiring Dec. 31 that face additional restrictions the Trump administration has placed on new or renewed waivers. Though it has yet to finalize its decision, the federal Centers for Medicare & Medicaid Services said Arkansas’ 13-year-old waiver does not comply with new “budget neutrality” rules that take effect in January, said Gavin Lesnick, a spokesperson for the Arkansas Department of Human Services. The rules tighten a policy forbidding Medicaid waivers from increasing federal spending on the program beyond what it would have increased without the waiver.
The state is now seeking a two-year extension after hearing from CMS that its request for a five-year renewal would not be granted. If its Medicaid expansion waiver is not renewed, Arkansas officials have said they will continue offering expanded eligibility through existing Medicaid law — a change that could leave enrollees facing different costs. The waiver-based expansion helped cut the state’s uninsured rate by nearly half, but it also ended up costing more than if beneficiaries were covered under Medicaid’s traditional, fee-for-service program.
Critics characterize the new waiver rules as part of a Trump administration effort to dramatically shrink Medicaid, the government program for people who are low-income or disabled, which grew rapidly under Presidents Barack Obama and Joe Biden.
“What we have here is a sneaky way to cut Medicaid expansion and the Medicaid program,” said Nicole Huberfeld, a professor of health law at Boston University. Medicaid enrollees won’t know whom to blame if they lose coverage because the administration is using arcane regulatory processes to make the changes, she said.
At issue are waivers granted by the government that allow states flexibility from existing Medicaid law in how they cover low-income residents, as long as the changes do not increase what Medicaid costs the federal government. Pivoting from the long-standing practice of checking only retroactively whether states were keeping their budget promises, the Trump administration said in June that it would not renew or approve any waivers unless CMS first certified they would not increase costs to the federal government.
“Characterizing enforcement of a statutory budget neutrality requirement as a cut misrepresents both the law and this guidance,” CMS spokesperson Timothy Foster said in an email to KFF Health News. The federal waivers are intended “to test innovative approaches to delivering care, not provide an open-ended mechanism for increasing federal spending.”
Other states with waivers expiring at the end of December include Georgia, which has added about 18,000 low-income people to Medicaid under its waiver, and California, which has used its waiver to expand coverage of social services including food and housing support.
This story was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism. Learn more about KFF Health News.