The “Iowa Compromise”: Reaching agreement on the Medicaid Expansion for Iowans

Amazing! Truly amazing! Every so often, we observe an exceptionally fine, noteworthy example of the art of political compromise. Much rarer, indeed, is when that example produces a result that is considerably better than either of the original positions. When both outcomes occur, we really marvel. The art of political compromise still is actually possible in the United States. And it can produce exceptionally good outcomes.

Such an instance occurred very recently in Iowa. For more than a year, Republican Governor Terry Branstad emphasized and reiterated that he would not permit Obamacare’s Medicaid Expansion in Iowa. He had far too many unanswered questions. It would just not be good for Iowans. In its stead, the Governor proposed further work on the Iowa Healthiest State Initiative (see https://www.iowahealthieststate.com/) to increase the wellness of the population by addressing smoking, obesity, high blood sugar, etc. In lieu of the Medicaid Expansion, the Governor wanted to offer commercial insurance to newly insured persons, who would pay either a monthly fee or insurance premiums, depending upon income level, which would be reduced or eliminated if they participated in appropriate prevention and wellness activities.

On the other hand, the Democratic Senate Majority Leader, Mike Gronstal, argued eloquently that Iowa needed the Medicaid Expansion. Many Iowans were without health insurance, and a large number of those who were uninsured were very poor. The federal government would pay 100% of the cost of the Medicaid Expansion for 2014-2016, and then an amount decreasing to 90% by 2020, which would remain the permanent federal contribution. Obamacare’s Medicaid Expansion would be a very good deal for Iowa and for Iowans!

Throughout the year, skirmishes occurred between the Governor and the Senate Majority Leader, but no action was taken. Both reiterated their original positions. To all appearances, the issue was stalemated.

Then, very early in June, the tenor changed just a few short days before the end of Iowa’s legislative session. Time was running out as well on the decision to participate in the Medicaid Expansion during 2014. If this deadline were missed, the 2014 federal funds for the Medicaid Expansion would be lost permanently. Negotiations ensued between the Governor and the Senate Majority Leader. Both gave up part of their strongly-held positions in return for retaining something else.

What came out of this period of negotiation? Simply, Iowa will do the Medicaid Expansion, but in a more elegant way. The key features of the new Iowa Health and Wellness Plan:

Ø      Uninsured persons up to 100% of the federal poverty level (FPL) will participate in the Medicaid Expansion through the Iowa Wellness Plan (see https://www.dhs.state.ia.us/uploads/IAWellnessPlanDraft1115.pdf ). Their Alternative Benefit Plan will be benchmarked to the benefits offered to Iowa state employees. Medically frail persons between 101 and 133% FPL will be able to choose traditional Medicaid or opt into the new Plan. This new Plan will encompass care coordination, managed care, and the creation of Accountable Care Organizations (ACOs).  

Ø      Those between 101 and 133% FPL who are not medically frail will participate in the Iowa Marketplace Choice Plan (see https://www.dhs.state.ia.us/uploads/IAMktplaceChoiceDraft1115.pdf). Participants will be offered a Qualified Health Plan through the Iowa Health Insurance Marketplace, which will be operated by the US Department of Health and Human Services. The Qualified Health Plan will meet the requirements of the Essential Health Benefit. Insurance premiums will be paid from federal funds for the first year of enrollment.

Ø      All newly enrolled persons up to 133% FPL will be encouraged to participate in prevention and wellness activities.  A required monthly payment will be waived to incentivize these activities for those up to 100% FPL, and continued payment of insurance premiums, for those between 101 and 133% FPL.  

This “Iowa Compromise” actually is much better than either original position held by the Governor or the Senate Majority Leader. In fact, we could argue that it is better than the original concept of the Medicaid Expansion. Prevention and wellness activities, with a financial incentive, ought to be considered by other states as part of their Medicaid Expansions.

These other states also might consider partitioning the Medicaid Expansion population so that the primary focus of the state Medicaid Program is given to those who most need that intensity of services.

I do hope that the “Iowa Compromise” will serve to motivate other governors who have not yet elected to do the Medicaid Expansion. To these governors and their other state elected officials, I would say that you can do the Medicaid Expansion in a way that will advance your political priorities and interests. Your citizens who are poor and who lack health insurance coverage will thank you. And your state tax dollars will stay in your own state rather than migrate to pay for the Medicaid Expansions in other states.

The “Iowa Compromise” really embodies a much broader political lesson: Good governing practices always include compromise when necessary to promote a common good. In compromise, everyone gains something; there are no stark losers. A disagreement has been concluded successfully for everyone. By contrast, stalemate produces nothing but frustration and anger for all involved. A new bumper sticker sums up this lesson very well: “Wag more. Bark less.”

Our hats are off to Governor Branstad and Senate Majority Leader Gronstal for having the courage to undertake a very significant political compromise. Many Iowans will benefit from your wise decision, and we all can learn from your example.