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HHS Brief Examines Medicaid Section 1115 Policies

In response to President Biden’s executive order to review Medicaid and Affordable Care Act (ACA) policies that might reduce coverage, the Department of Health and Human Services (HHS) published an issue brief on Medicaid demonstrations and related impacts on health coverage.

The brief, released by the HHS Assistant Secretary for Planning and Evaluation (ASPE) Office of Health Policy,  reviews policies and evidence of impact on Medicaid coverage and access to care under four areas of Section 1115 demonstrations: work requirements, healthy behavior incentives, health savings account–like arrangements, and capped federal funding and other financing changes.

ASPE found these policies and others — such as premiums, eliminated retroactive eligibility, and increased circumstance verification — all create barriers to enrollment and reduce coverage, leading to adverse health effects.

Work Requirements

Some states have sought to implement work or community engagement requirements to maintain Medicaid eligibility or receive additional benefits, requiring beneficiaries to report work or other qualifying activities.

Twenty-three states submitted demonstration projects including these policies. Five states have proceeded to implementation; only Arkansas has disenrolled beneficiaries from Medicaid due to noncompliance.

Research shows limited awareness of reporting requirements has led to, or potentially would have led to, large coverage losses for beneficiaries in Arkansas, New Hampshire, and Michigan. Research also indicates most individuals subject to work requirements either already work, would qualify for an exemption, or face substantial barriers to work. Further, of 18,000 people unenrolled from Medicaid in Arkansas, many delayed seeking health care or taking medications due to cost.

Healthy Behavior Incentives

Healthy behavior incentive programs are designed to improve health outcomes, reduce costs, and increase patient involvement in care. These programs either provide financial incentives to participate or are required for Medicaid enrollment. They have low participation rates with limited program awareness.

Where required, most beneficiaries were unaware of their required participation and unenrollment in Medicaid. However, research suggests states that expanded Medicaid with these incentive programs still experienced significant coverage gains compared to non-expansion states.

Health Savings Account–Like Arrangements

Similar to healthy behavior incentives, these provisions aim to increase beneficiary involvement in their health care through required monthly payments. Such programs have low participation due to confusion or lack of awareness and have lead to unenrollment in Medicaid.

Capped Federal Funding and Other Financing Changes

Also known as block grants, capped federal funding has not been implemented and there is no evidence of its impact. The Centers for Medicare & Medicaid Services has approved an alternative financing arrangement with an aggregate cap and broader state authority for Tennessee, which has yet to be implemented.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions. 


About the Author

Julie Kozminski is a senior policy analyst at America's Essential Hospitals.

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