Public Finance Implications Of State Medicaid Policy: How Section 1115 Waivers Are Shaping Medicaid Reform

Open Access
Conner, Casey Christopher
Area of Honors:
Bachelor of Science
Document Type:
Thesis Supervisors:
  • Brian Spangler Davis, Thesis Supervisor
  • Brian Spangler Davis, Honors Advisor
  • James Miles, Faculty Reader
  • Medicaid
  • Public Finance
  • Section 1115 waiver
  • healthcare
With the Affordable Care Act (ACA) expanding Medicaid coverage to individuals under 65 years old with incomes up to 133% of the federal poverty level (FPL), many states have found the increased enrollment burdensome on the state budget. States have used Section 1115 waivers to implement new requirements to receiving coverage. These waivers offer states flexibility in administering Medicaid programs in their state as long as the policies of the waiver are in line with the overarching goals of Medicaid. A recent trend in Section 1115 demonstrations is the inclusion of work requirements and cost-sharing premiums as conditions of eligibility. This study examines the recent waiver approvals in Kentucky and Arkansas that include work requirements. Specifically, this study analyzes the financial implications of changes in enrollment or per capita costs that might result from such a major change in conditions of eligibility. The results of the financial simulations demonstrate that slight changes in enrollment or cost estimates can have significant impacts on the overall savings of a Section 1115 waiver. This is due largely in part to the size of the Medicaid programs in these states and nationwide. Consequently, it is important to understand the estimated effect of work requirements and cost-sharing initiatives to more accurately predict Medicaid costs. Ultimately, the findings of this study show the growing importance of Section 1115 waivers and the need to understand the financial implications of new policies.