Health Reform WK-EDGE Top 5 Medicaid developments in 2017
Friday, December 22, 2017

Top 5 Medicaid developments in 2017

By Bryant Storm, J.D.

The Medicaid program faced new and unexpected challenges in 2017, including efforts on the state and federal level to redefine the scope and nature of the program. Among the most notable Medicaid developments were: (1) Congress’ attempt to redesign the program’s funding structure; (2) the progression of Medicaid expansion, despite the Trump Administration’s opposition; (3) litigation over the right of Planned Parenthood to participate in Medicaid; (4) the yet unanswered question of whether Congress will fund the Children’s Health Insurance Program (CHIP); and (5) the request by seven states to implement work requirements as a condition of Medicaid eligibility.

1. Legislative Action

Both the Senate and House took steps to pass legislation that would have substantially altered the funding structure of the Medicaid program. The American Health Care Act (H.R. 1628), presented by House Republicans as the long-promised measure to repeal and replace the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), in many ways was more of a Medicaid reform bill than a repeal of the ACA. The bill proposed to repeal Section 2001 of the ACA (Medicaid expansion)—removing the state option to extend coverage to adults above 133 percent of federal poverty. Additionally, the AHCA sought to move away from traditional Medicaid funding towards a per capita model, where, beginning in 2020, per enrollee limits would be placed on federal payments to states (see Republicans present health reform that is neither repeal nor replacement, March 7, 2017). Similarly, the Senate’s ACA repeal effort—The Better Care Reconciliation Act (BCRA) (H.R. 1628)—sought to limit Medicaid spending through a transition to per-capita caps or block grants. Although the BCRA was presented as an ACA repeal effort, the CBO projected that its largest spending impact would be on Medicaid. Overall, the CBO estimated that the BCRA would have reduced federal program spending by $160 billion in 2026, as compared to projections based upon current law. Due largely to opposition over the bills’ impact on Medicaid, both measures failed to garner adequate support (see BCRA would curb Medicaid spending growth, increase uninsured numbers, June 30, 2017).

2. Medicaid Expansion

Early signs from the Trump administration indicated that the administration did not have a favorable view of Medicaid expansion (see Did CMS just sound the death knell for Medicaid expansion?, March 15, 2017). However, Medicaid expansion continued to obtain support around the country, with the majority of the states moving forward with expansions of their Medicaid programs. To date, 33 states, including the District of Columbia, have implemented the ACA’s expansion of Medicaid, with Louisiana the latest to come on board. Several non-expansion states—Idaho, Tennessee, Virginia, and Wyoming—indicated during 2017 that they were putting Medicaid expansion discussions on hold due to questions about the future of the ACA expansion option (see Despite uncertainty about ACA states most states moving forward with Medicaid expansion, October 19, 2017). In November, Maine became the first state to vote to expand Medicaid through a ballot initiative, however opposition from the state’s governor has raised doubt as to when and whether the expansion will become effective (see Maine becomes first state to expand Medicaid through ballot initiative, November 8, 2017).

3. Planned Parenthood

This year, legislative battles continued in multiple states over states’ rights to terminate the Medicaid provider agreements of Planned Parenthood organizations. The termination fights stem from the release of videos in 2015 purporting to show Planned Parenthood affiliates discussing the illegal sale of fetal tissue (see States threaten to end Planned Parenthood Medicaid funding despite CMS warnings, August 25, 2015). The Eighth Circuit vacated the temporary injunctions granted to enjoin the Arkansas Department of Human Services from suspending Medicaid payments to Planned Parenthood of Arkansas and Eastern Oklahoma because the individuals did not have an enforceable right that supported a cause of action (see No individually enforceable federal right, no injunction, August 17, 2017).

Five Planned Parenthood providers prevailed in a Texas district court, receiving an injunction against the state Health and Human Services Commission (HHSC) preventing the agency from terminating the providers from the Medicaid program, on the grounds that the HHSC likely attempted to exclude the providers without cause (see Texas Planned Parenthood entities remain Medicaid providers pending trial challenging termination, February 22, 2017). Similarly, the Fifth Circuit denied a petition for rehearing en blanc of a previous decision (see Injunction protecting Planned Parenthood in Louisiana is upheld, June 30, 2017) to uphold a preliminary injunction granted to prevent the Louisiana Department of Health and Hospitals (LDHH) from suspending Medicaid payments to Planned Parenthood Gulf Coast, Inc. (see Dissenters say decision poses great threat to state administration of Medicaid, November 30, 2017).

4. CHIP Funding Extension

Federal funding for CHIP expired on September 30, 2017. Congress has yet to reauthorize funding for the program which covered 8.9 million children in 2016 (see Expiration of federal funding threatens state CHIP programs, October 18, 2017). States are currently running out of federal CHIP funds will run out altogether without Congressional action (see Will Congress deliver coal or tax reform to Oval Office for holidays?, December 1, 2017). In July, the Medicaid and CHIP Payment and Access Commission (MACPAC)—a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress—published a reportestimating when states would exhaust allotments, if funding was not extended. According to MACPAC, all states are expected to exhaust their federal CHIP funds during fiscal year (FY) 2018. As of July 2017, $4.2 billion in unspent FY 2017 allotments were available for spending in FY 2018. However, at that same time, MACPAC estimated FY 2018 CHIP spending for all states and territories to be $17.4 billion.

5. Work Requirements

The Trump Administration signaled, via a March 14, 2017, letter, its willingness to approve work requirement waivers under Section 1115 of the Social Security Act (SSA) (42 U.S.C. § 1315) (see Does Medicaid work with a work requirement?, March 29, 2017). Seven states—ArkansasIndianaKentuckyMaineNew HampshireUtah, and Wisconsin—have pending waiver requests which, if approved, would require work as a condition of Medicaid eligibility for non-disabled, working-age adults in expansion or traditional Medicaid populations. Although the specifics differ among states, generally, the Medicaid employment waivers would require Medicaid beneficiaries to verify their participation, for a certain number of hours per week, in certain job related activities, including employment, job searching, or job training programs, to receive health coverage.


In many ways, 2017 proved to be a year of things that never quite came to pass for the Medicaid program. While dramatic legislative restructuring remains in the offing as something that maybe considered by a future Congress, lawmakers were unable to garner support to upend the status quo by repealing Medicaid expansion or implementing Medicaid block grants or per capita caps. In a similar fashion, Congress has fallen short on extending funding for the CHIP program, leaving many states in doubt as to how they will keep their programs solvent. Medicaid did see some action, however, in the form of a growing number of states embracing expansion, novel Medicaid waiver requests, and continued litigation over the contentious terminations of Planned Parenthood providers. If nothing else, 2017 was an instruction for states as well as Medicaid providers and beneficiaries to remain on guard for changes big and small.

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