Arizona: NHeLP Breaks Down the Arizona Maintenance of Effort Issue

Executive Summary

This paper describes the decision by HHS did not approve a request to waive the maintenance of effort requirement for Arizona, but did discuss waiver authority.

On February 15th, HHS Secretary Kathleen Sebelius sent a letter to Arizona Governor Jan Brewer in which the Secretary did not volunteer to waive the ACA's Maintenance of Effort (MOE) provision as the Governor had requested, though the Secretary did point out that some Arizona populations could ultimately be disenrolled without waiver authority.


On January 25, 2011, Governor Brewer submitted a request asking HHS to use its Social Security Act section 1115 demonstration authority to waive the Maintenance of Effort requirement in the ACA, which prohibits the state from reducing eligibility in Medicaid prior to 2014. At the time she made the request the Governor explicitly stated her intent to use the waiver authority to terminate about 280,000 adults enrolled in Medicaid. Of the 280,000:

  • About 244,000 are childless adults who are not otherwise Medicaid eligible populations
  • About 30,000 are parents (for whom Brewer was proposing to lower the eligibility threshold from 100% FPL to 50% FPL)
  • About 6,000 are very low-­?income families and individuals who qualify by spending their income down to 40% of the federal poverty level

Note: Although Arizona has a state plan and covers some populations through a state plan and others through demonstration authority, Arizona's entire Medicaid program is run through a Medicaid managed care 1115 deomonstration.  In thi brief we will refer to both Arizona's existing Medicaid 1115 demonstration programs, and its separate request for additional waiver authority to ignore the MOE.

The HHS response does not present any surprises or new interpretation of law around the MOE, and to be clear, there was no waiver of the MOE provision.

  • The HHS response does not grant Arizona authority to terminate individuals enrolled in optional (or mandatory) Medicaid categories of coverage included in the state plan. And, there is no indication that the Secretary would be willing to waive the MOE for anyone who is actually covered through demonstration authority, but could be covered in a state plan population.
  • The HHS response does not grant Arizona authority to terminate individuals enrolled in ongoing demonstration programs, or terminate these programs before the date they are already set to expire (in this case September 30, 2011).
  • The HHS response does explain that Arizona has the authority to choose not to renew its current deomonstration programs when they expire.  HHS's position is that the MOE doesn't require a state to renew an expiring demonstration program. However, this non-­renewal exception is applied only to populations "whose eligibility derives from the demonstration" – NHeLP interprets this legally to mean only populations who could not otherwise be eligible as a state plan population. Consistent with this interpretation, the HHS letter specifically mentions the childless adult population as an example of such a population.

Note: Some media reports and Arizona officials have not correctly characterized the HHS response.

Text has been truncated. For full publication text, download document.

Related Content