THE POTENTIAL EFFECT OF DIVERSION ON ACCESS TO MEDICAID

One of the primary goals of this research was to consider whether the operation of diversion programs might result in fewer families being eligible for and/or enrolled in Medicaid, either as a direct or indirect consequence of being diverted. As discussed in Chapter Four, two main factors are relevant to this inquiry: how well the implementation of diversion programs and delinking policies has been and is being accomplished, and how state officials have addressed interaction between eligibility for welfare and eligibility for Medicaid via policy decisions. These five states illustrate a range of diversion program design decisions, implementation approaches, and Medicaid policy decisions that can inform the strategic decisionmaking in other states. While these states should not be considered representative of all states, these findings are certainly informative for federal and state officials and policymakers.

The extent to which Medicaid and welfare/TANF officials collaborated on making Medicaid and welfare/TANF policy changes varied across these states, although it was often difficult to get a good sense of the extent and significance of this collaboration. Similarly, reports about state efforts in outreach and education regarding the ability to apply for and be eligible for Medicaid independent of welfare also varied but were difficult to gauge for their relative intensity and impact. It is important to note that, while Medicaid agency officials are ostensibly responsible for determining Medicaid eligibility criteria, welfare/TANF agency officials are usually responsible for implementing Medicaid eligibility criteria by virtue of their traditional responsibility for

and collaboration between these two sets of state officials with respect to the implementation and interaction of the two programs can not be overstated.

A particularly important area of collaboration and joint attention is the need to focus attention on Medicaid as a stand-alone health insurance program for low-income families. This shift in focus to populations eligible for Medicaid without regard to their eligibility for TANF represents a fundamental shift from initial stakeholder concerns about delinking post-PRWORA that focused primarily on whether TANF-eligible families would still get Medicaid. States should develop outreach efforts specifically targeted to adults and create accessible opportunities for applying for Medicaid. For example, states’ outreach efforts about their CHIP programs may significantly improve the number of children who are enrolled in Medicaid but could also be useful for communicating to their parents that they too may be eligible for Medicaid even though they are not eligible or applying for TANF. In addition, ongoing training and support for

caseworkers/eligibility workers could complement these expanded education and outreach efforts and provide them with the knowledge and tools to implement the dual eligibility system for TANF and Medicaid.

Thus, the compelling Medicaid and welfare reform policy issue/challenge posed by diversion is how to use Medicaid effectively to support the broad goal of welfare reform to encourage working families. In light of reports that the ability to access health insurance is an important factor in job retention for low-income workers, the ability to promote access to Medicaid for families who choose work instead of welfare is critical. In order to meet this challenge, state officials from both agencies must 1) fully understand and appreciate how their current diversion policies and practices actually work, specifically with regard to determining

eligibility for Medicaid regardless of TANF eligibility; and 2) as needed, use the authority and flexibility available in Section 1931 to develop Medicaid eligibility policies that complement and support welfare to work strategies.

Like Maryland and Montana, states could consider establishing more generous income and resource disregards and promoting the availability of transitional Medicaid benefits. Missouri represents a more sweeping approach with its 1115 Medicaid waiver that will allow more low-income families across the board to be eligible for Medicaid. While these states used various waivers to broaden access to Medicaid (i.e., Maryland’s and Montana’s programs were

implemented initially under the authority of Title IV-A and Title XIX waivers), states now have the flexibility to adopt many of the same provisions under the authority provided by Section 1931.

As discussed in Chapter Four, however, liberalizing (i.e., using less restrictive) the income and resource methodologies may result in increases in state Medicaid expenditures, depending on the scope of the liberalizations. ²³ There is less flexibility in replicating or extending transitional Medicaid provisions granted under the so-called Title XIX waivers. Guaranteeing and/or

increasing access to transitional benefits is challenging because 1) a two-step eligibility process is involved (i.e., families must first be found eligible for “regular” Medicaid and then for transitional benefits), and 2) federal rules require that states meet budget neutrality requirements for any new Title XIX waivers. The cost neutrality requirement will likely limit the use of this option.

Ultimately, state officials should carefully examine the interaction between the two programs and consider whether they intended to reduce access to Medicaid by the operation of diversion programs. Intensive and ongoing communication and collaboration between state Medicaid

officials and state welfare officials could facilitate an informed awareness of the interactive effects of policies and procedures, and provide these officials with the opportunity to explore ways to avoid unintended and/or undesirable results.