Oregon Medicaid proposal includes kids-under-6 rule change, services for some inmates

By Amelia Templeton (OPB)
Feb. 24, 2022 1 p.m.

Oregon has submitted a new five-year proposal for big changes to the Oregon Health Plan, the state’s Medicaid program.


The federal government allows states to use the five-year proposals, known as 1115 demonstration waiver applications, to bend the typical rules that govern Medicaid. The waivers encourage innovation and are supposed to be cost-neutral.

Oregon along with a handful of states across the country has asked for the flexibility to spend Medicaid dollars on some people in jail and prison, in spite of a longstanding ban.

And in a national first, Oregon has proposed keeping kids continuously enrolled through their sixth birthday.

Here’s an overview of that and other noteworthy elements of Oregon’s proposal.

FILE - In this March 18, 2011, unidentified inmates play cards in the Josephine County Jail in Grants Pass, Ore. The Oregon Health Authority wants to provide full Oregon Health Plan coverage for adults in county jails.

FILE - In this March 18, 2011, unidentified inmates play cards in the Josephine County Jail in Grants Pass, Ore. The Oregon Health Authority wants to provide full Oregon Health Plan coverage for adults in county jails.

Jeff Barnard / AP

Medicaid for people behind bars and people preparing for re-entry.

The Oregon Health Authority wants to provide full Oregon Health Plan coverage for youth in county-run juvenile correctional facilities and for adults in county jails.

Adults in state prison and in the Oregon State Hospital could receive some Oregon Health Plan benefits and transition assistance starting 90 days before their release.

The big question: Will the federal Centers for Medicare & Medicaid Services (CMS) approve this idea, or some version of it?

Currently, OHA suspends Medicaid enrollment during a person’s time in custody and re-starts it after their release, consistent with federal guidelines.

This often leaves people uninsured at a particularly fraught time: the two weeks immediately after they get out of jail or prison.

That’s when people with substance use disorder are most likely to relapse and die.

A study from North Carolina, for example, found that a former inmate’s risk of death from a heroin overdose peaked at two weeks following their release and was 74 times higher than the risk for the general population.

People in the justice system also have higher rates of chronic conditions and infectious diseases like tuberculosis, hepatitis, and HIV/AIDS, and are more likely to be hospitalized in the year following their incarceration.

“They’re left to fend for themselves,” said Vikki Wachino, executive director of The Health and Reentry Project. “It makes a lot more sense to connect them with services like primary care as they’re being released.”

Wachino, a former deputy administrator of the Centers for Medicare & Medicaid Services, says the Biden Administration will likely give Oregon’s proposal serious consideration, even though the federal government has blocked Medicaid spending on incarcerated people for more than 50 years.

County jails and state prisons are required to provide health care for incarcerated people, but Medicaid plays almost no role in funding those services.

The same statute that created the Medicaid program barred states from spending federal matching dollars on health care for anyone, juvenile or adult, who is an “inmate of a public institution.” The only exception is if an inmate is taken to a community hospital.

The 1115 waiver program, though, allows CMS to disregard some parts of the original Medicaid statute in the interest of letting states innovate.

States have tried, so far unsuccessfully, to get CMS to approve waivers to so-called inmate exclusion. But the Biden administration may be poised to allow it for the first time.

Non-partisan groups like the National Sheriff’s Association have come out in support of ending it.

Six states, and now Oregon, have proposed exceptions to the rule in their recent waiver applications. In one signal of where the Biden administration stands, the Build Back Better legislation passed by the U.S. House would have allowed Medicaid to cover services 30 days prior to release for people who are incarcerated.


The other states seeking waivers to the inmate exclusion are Arizona, California, Kentucky, Montana, Utah and Vermont.

Children could stay enrolled until they are 6 years old.

About half of the kids in the United States get their health insurance from Medicaid.

Here’s what’s standard: at least once a year, families have to re-enroll and show their income is low enough to qualify.

Oregon is asking for an exception to that rule for children. They’d be able to stay enrolled through their sixth birthday, regardless of any changes that could otherwise make them ineligible.

“It’s a wonderful proposal,” said Joan Alker, with the Georgetown University Health Policy Institute, a non-partisan research center. “It will ensure that children have continuous coverage during those critical early development years.”

Alker says continuous enrollment has two benefits. First, it reduces red tape and avoids erroneously kicking families off of Medicaid even though they still qualify for it.

That can happen if the state doesn’t have the right address for a family or if the family doesn’t understand the complicated Medicaid paperwork.

Continuous enrollment also benefits families that experience small fluctuations in their income.

In Oregon, children can qualify for Medicaid or CHIP if their family earns less than 305% of the federal poverty level, or about $85,000 for a family of four.

Alker believes it doesn’t make sense to remove children from the program because their parent received a promotion or picked up more hours of seasonal work. They may still be unable to afford insurance for their child.

“Employer provided, privately provided insurance gets especially expensive when you are trying to cover dependents,” Alker said, “which is part of why these programs are so important for children.”

Oregon has also proposed keeping adults enrolled in Medicaid for two years at a time, regardless of a change in their income or eligibility.

OHA says data from the pandemic shows that longer enrollment periods will help cut “churn,” reducing administrative costs for the state and the burden on families.

At the outset of the pandemic, the federal government ordered states to allow people to stay on Medicaid for as long as the public health emergency lasted, and offered additional funding to keep them on the rolls.

In Oregon, allowing people to stay insured has led to a dramatic drop in the percentage of people losing eligibility for Medicaid and then requalifying within a year.

The Oregon Health Authority has abandoned two cost-saving measures that drew sharp criticism during the public comment period.

Oregon health officials dropped a proposal for a closed formulary, a pharmacy term that means a fixed list of approved medications.

OHA wanted to limit its coverage of certain prescription drugs in cases where there is more than one drug available for similar uses.

“We’d proposed that as a way to save some money, to be able to negotiate better prices,” said Jeremy Vandehey, director of health policy and analytics at OHA.

No other state has gotten this approved, though others have requested it.

During public comment, many patients’ and physicians advocacy groups opposed the policy.

OHA agreed to drop it for now, but Vandehey says controlling pharmaceutical costs remains a challenge.

The state is still requesting the authority to limit coverage of some new and experimental drugs.

Finally, Oregon has also agreed to re-think the way it decides what services to cover for children on Medicaid.

The state will continue to rely on a public commission to set benefits for adults and children on Medicaid, using a list that ranks treatments based on their efficacy, importance and cost.

But OHA has agreed to make it easier for kids and their providers to request treatments that are not on that list.