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The feds sign off on expanding Medicaid to 100,000 Iowans

Iowa Gov. Terry Brandstad  is accompanied by cheese head portrait of himself (and fellow Republican and House budget chairman Rep. Paul Ryan, too). (AP /Charlie Neibergall)

The federal government gave Iowa the go-ahead on Tuesday to expand its Medicaid program -- and, in the process, gave the state a new flexibility to tweak the public program's benefit package.

The Plum LIne's Greg Sargent reported earlier Tuesday that the Department of Health and Human Services was preparing to approve Iowa's proposal to expand its Medicaid program. Iowa had proposed using public funds to purchase private coverage for the Medicaid-eligible. You can read Iowa's two-part waiver here and here.

I called up Joan Alker at the Georgetown University Health Policy Institute, who knows more about Medicaid than anyone I've ever met, to have her walk me through what, exactly, the federal government had signed off on.

Iowa had proposed -- much like Arkansas before it -- using public dollars to buy Medicaid recipients insurance coverage through the marketplace. This wasn't especially new or controversial, given that the federal government approved the program for Arkansas earlier this year.

But, as Alker pointed out, Iowa wanted to do something different. Gov. Terry Branstad (R) wanted to charge a small premium for Medicaid enrollees who earn between 50 percent and 133 percent of the poverty line. In the Arkansas plan, there were no premiums at all.

Health and Human Services essentially split the difference with the state here: They're allowing premiums for those who earn between 100 percent and 133 percent of the federal poverty line, but not for those who earn below that. The premiums are limited at 2 percent of income (for someone at the poverty line, this is about $19 a month), and enrollees have the chance to reduce their payment by participating in a wellness program.

The other, and arguably bigger, difference between the Iowa and Arkansas plan is that Iowa has gotten more leeway in tweaking Medicaid's benefits package.

One big sticking point in the debate over the Arkansas proposal was whether the private insurance plans would have to provide their new Medicaid enrollees with benefits that are guaranteed in the public program but not typical on the private market. A good example  is non-emergency transportation, a benefit under Medicaid that provides enrollees with rides to the doctor. This is not something that you normally see in private insurance plans. But for a Medicaid enrollee, who may not have a car or fall short on bus fare, this could be a very important benefit.

In the Arkansas program, the federal government said that private plans would have to provide all these benefits to their Medicaid subscribers. But Iowa is getting a one-year waiver on non-emergency public transportation.

"We have provided authority to relieve the state from the responsibility to assure non-emergency medical transportation to and from providers for the Marketplace Choice population," Medicare administrator Marilyn Tavenner wrote in a letter.

The non-emergency transportation requirement is waived for one year, when the federal government will look at the issue again.

"It does cross some lines that Arkansas didn't cross," Alker said of the Iowa waiver. "You want them to have this transportation. It doesn't work perfectly in the real world, but if there's not a good alternative available to get to the appointment, this is important."

In the short-term, the approval of this waiver means that about 100,000 Iowans who were shut out of the health law's expansion may now gain coverage.

In the long-term, the Iowa waiver is part of a larger story about Republican governors using their new-found leverage with the Medicaid expansion to reshape the public program. This includes Florida Gov. Rick Scott's plan to move all beneficiaries there into privately-managed Medicaid plans. Virginia wants to explore ways to increase cost-sharing. And, now in Iowa there is a new use of premiums and a small scaling-back of benefits. In a weird way, Obamacare could end up changing the Medicaid program not just by making it bigger -- but by making it more Republican, too.

Correction: A previous version of this article cited an old projection for the number of Iowans who could enroll in the Medicaid expansion. The Center for Medicare and Medicaid Services estimates that 100,000 people would be able to sign up for coverage.