State Medicaid reform under Section 1115 demonstration authority

Given the complexity of federal Medicaid law and the limitations it imposes on state flexibility, it is likely that states will continue to ask the Secretary to grant waivers under Section 1115 to allow them to pursue new approaches to health care reform. The results of currently operational Section 1115 projects involving statewide managed care systems will be useful in evaluating the Medicaid reform measures currently under discussion in other states and at the federal level. In particular, the ability of the states to control Medicaid and indigent care costs and to utilize federal dollars more efficiently should prove important in evaluating a block grant approach to federal Medicaid funding. Moreover, Section 1115 project results that bear on the sufficiency of various Medicaid capitation rate methodologies will also be of value as more states expand the use of managed care arrangements for their Medicaid populations.