August, 2016

Section 1115 Waivers: An Increasing Part of the Medicaid Program

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The Medicaid program, made law in 1965, now constitutes the largest intergovernmental grant in the United States. 1 Intergovernmental grants are transfers of funds from one level of government to another and are often used in the United States to achieve nationwide social goals by providing financial support to implement those goals at the state or local level. This paper examines whether political affiliation in federal and state governments affects the likelihood that a state will be approved by the federal government for a Section 1115 Medicaid waiver, which is designed to allow states to advance the stated goals of Medicaid while being given some flexibility beyond federal Medicaid rules. My analysis of waiver approval times from 1994 through 2016 found evidence that a state may have its waiver approved more quickly if the legislature or governor belongs to the same party as the president. This finding casts doubt on the ability of a state government to use Section 1115 waivers to reform its Medicaid program free of political influence from the federal government.