New Medicaid agreement opens health care opportunities

Under Vermont’s newest Medicaid agreement with the federal government, Vermont will get more money and be allowed more flexibility in the services it provides and the people it provides them to. It also gives the state support to address some difficult public health issues that have worsened during the pandemic.

Medicaid, an entitlement program that gives states federal matching funds for health care services for low-income residents, affects about a third of Vermonters, including more than 65,000 children. Each year it accounts for nearly 30 percent of health care dollars spent on Vermonters. Before the pandemic Medicaid spending was about $1.8 billion in federal and state dollars combined. For every dollar from the state, the feds put in about $1.17. The federal share increased during the pandemic and is expected to return to the previous level when the pandemic recovery measure sunsets.

In 2005 Medicaid changed the way it financed health care in Vermont with the first Global Commitment to Health waiver. Unlike other states Vermont agreed to control costs, and limit federal contributions, by establishing a cap on Medicaid spending. In exchange, the state was allowed new flexibility to cover more health services for more people. Renegotiated with the federal government every three to five years, the agreement signed this summer goes through the end of 2027.

The new waiver agreement raises the cap and for the first time allows the state to renegotiate it mid-contract. It also gives Vermont more funding for services the state already provides, including Community Rehabilitation and Treatment Services and VPharm. Starting in July, Community Rehabilitation and Treatment services, providing supports for people with serious mental illness, are available to Vermonters regardless of income. Previously the program was only for people closer to the poverty line. VPharm, helping older Vermonters pay for prescription drugs, also began supporting more Vermonters this summer when the income cap was raised.

The waiver also represents a new opportunity for Vermont to address some persistent health-related social issues, but the state will receive federal matching funds for this purpose only if it commits to spending state funds on the new services. For example, the state can choose to expand substance use treatment services, currently not available to those above Medicaid income limits, with federal dollars helping to cover care for Vermonters at higher income levels. This recognizes that the opioid crisis does not just affect low-income people. Some needs are universal, and costs are prohibitive for middle-class people too.

And Vermont has the option to start funding services of a different nature. Vermont can use Medicaid funds for a Permanent Supportive Housing Program pilot, for example, helping Medicaid enrollees secure and maintain housing. This is part of a larger national trend of federal Medicaid authorities recognizing that housing affects people’s health and vulnerability to disease—something that became clear during the pandemic. It is putting money behind the understanding that wellness involves a lot more than medical treatment.

Medicaid, traditionally a program for the medical care of individuals, is also letting the state spend 32 percent more on investments that expand public health measures and access to care for low-income Vermonters, and support more people living in the community. Previously the state has invested over $100 million a year on these investments, including a list of services ranging from lead poisoning prevention to aid to the aged, blind and disabled, and now includes bonus pay for home service providers. The new waiver agreement allows the state to do even more to keep Vermonters healthy if policy makers choose to.

Under the new Medicaid contract, federal dollars are already funding additional health needs in the state. When the Legislature meets in January, it will need to decide whether to invest even more state dollars that will draw down additional federal funding and take full advantage of this opportunity, helping the state address its growing opioid and housing crisis along with other health needs.