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Fitch: States will take the lead on Medicaid reform despite ACA repeal and replace failure

Some states had already begun negotiations with the Centers for Medicare and Medicaid Services on securing Medicaid waivers, Fitch said.

Beth Jones Sanborn, Managing Editor

Despite the Senate's failure to pass an ACA repeal and replace bill, state governments are moving ahead with their own efforts to revamp Medicaid, especially through waivers, according to a Fitch Ratings report.

Some states had already begun negotiations with the Centers for Medicare and Medicaid Services on securing Medicaid waivers granting them more flexibility. State waiver proposals could affect both Medicaid expansion beneficiaries and the traditional enrollees, the report said.

Arkansas, Indiana and Kentucky have submitted proposals to CMS asking to add work requirements to their Medicaid expansions. Other states including Arizona, Maine, Pennsylvania and Wisconsin are considering work requirements for at least some traditional Medicaid enrollees as well, Fitch said.

[Also: Skinny repeal fails as McCain defects in dramatic early-morning vote]

Fitch ratings agency said the Trump administration has indicated they are in favor of such measures.

Overall, Fitch said states have indicated their proposed Medicaid changes could reduce costs and also "support key policy goals."

The states proposing these measures suggested they support "key policy goals" and could yield cost savings. "However, the actual amount of cost savings could be low as some health policy experts have raised questions about the efficacy of such work requirements given characteristics of the current Medicaid population. Adding work requirements could also add to state administrative burdens for oversight of the Medicaid program," the agency said.

[Also: Fitch: Outlook negative for nonprofits under political uncertainty, Medicaid expansion could help]

Fitch also projects states will continue to focus on controlling Medicaid spending as they look at their budgets. CMS predicted long-term rises in Medicaid spending due to growth in higher-cost traditional Medicaid-eligible populations, especially the elderly and disabled, and their most recent 10-year forecast for National Health Expenditures showed state and local government Medicaid spending will rise an average of 6.1 percent annually between 2017 and 2025.

"This is far ahead of Fitch's expectations for national economic growth and state tax revenue growth, signaling continued pressure on states to manage their budgets accordingly," Fitch said.

Twitter: @BethJSanborn

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