Maintenance of Effort (MOE) in Health Reform Helps Preserve Current Children's Health Coverage

It's appropriate that we are celebrating the passage of health reform while enjoying the first signs of spring. With snow banks receding and the sun warming, we happily anticipate the bounty of health reform as we watch the early sprouts emerge.

Ongoing state budget woes, however, remind us that a spring snowstorm can still bring a chill to the air. But like the hardy daffodil, early provisions in health reform are intended to fortify current programs so we can focus on moving forward without losing ground.

Health reform relies on Medicaid and CHIP as fertile soil to yield a bigger crop of insured low-income adults and children: 16 million more. Growth can only be assured if we protect the coverage gains states have achieved through current CHIP and Medicaid programs as we plant the seeds to provide affordable health coverage for all.

To protect current programs from the frosty state budget climate, the health reform law discourages states from pruning current eligibility levels and imposing new paperwork and other barriers to enrollment and renewal. To ensure we reap the harvest of a smooth transition to health reform, this MOE is applicable through 2014 for adults and 2019 for children.

MOE's are not new. For example, when CHIP was created in 1997, states were required to maintain their Medicaid coverage for kids in order to tap enhanced CHIP federal funding to expand coverage. States are currently subject to an MOE on Medicaid as a condition of accepting the enhanced federal Medicaid match (FMAP) through the American Recovery and Reinvestment Act (ARRA).

There is a significant penalty if states choose to disregard the MOE in health reform. Program changes in violation of the MOE will result in the loss of all federal Medicaid funding. It doesn't seem like a tough row to hoe for states to extend the MOE to their CHIP programs considering the more significant losses - that is all Medicaid funding compared to only the enhanced federal match provided through ARRA.

The MOE doesn't mean children and families can rest easy during this transition phase.  States can still scale back by eliminating optional benefits or reducing provider reimbursement rates, which can have a chilling effect on access to services like a late frost damaging fragile seedlings.

Ultimately, the Centers for Medicaid and Medicare (CMS) will determine whether or not a state is maintaining its effort. It is not yet clear how CMS will enforce the MOE for states that have not implemented an approved enrollment freeze or cap if they exceed state appropriations. While awaiting guidance from CMS, if you want to dig deeper into this issue, check out the recently released "Holding the Line on Medicaid and CHIP" memo from CCF and the Center on Budget and Policy Priorities.