Implications of CMS’s New “Healthy Adult Opportunity” Demonstrations for Medicaid
On January 30, 2020, the Centers for Medicare and Medicaid Services (CMS) released guidance inviting states to apply for new Section 1115 demonstrations known as the “Healthy Adult Opportunity” (HAO). These demonstrations would permit states “extensive flexibility” to use Medicaid funds to cover Affordable Care Act (ACA) expansion adults and other nonelderly adults covered at state option who do not qualify on the basis of disability, without being bound by many federal standards related to Medicaid eligibility, benefits, delivery systems, and program oversight. In exchange, states would agree to a limit on federal financing in the form of a per capita or aggregate cap. States that opt for the aggregate cap and meet performance standards could access a portion of federal savings if actual spending is under the cap. This issue brief explains the key elements of the HAO guidance and considers the implications of the new demonstrations.