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Work Requirements: A New Blow to Medicaid

by Amanda Z. Naprawa  

Medicaid, a public health insurance program jointly funded by the states and federal government, is the single largest source of public health coverage in the United States. It covers approximately one in five Americans and is the country’s primary payer for nursing-home care. The program has traditionally covered a largely low-income population, including children, pregnant women, parents of dependent children, people with disabilities, and qualifying individuals over age 65.

With the passage of the Affordable Care Act, also known as Obamacare, states were authorized to expand Medicaid coverage to include non-disabled, low-income adults without children. In addition, states could choose to offer Medicaid coverage to people earning more than what was previously allowed. For instance, prior to expansion, the average cutoff for eligibility for a family of four was an annual household income of $14,300, or 61 percent of the federal poverty level (FPL) in 2015. With the expansion, states could offer coverage for people in households up to 138 percent of the FPL, or more than double the previous income cap.

Nationally, the Medicaid expansion translated into nearly 12 million newly insured people in 33 states and the District of Columbia. This was good news from a public health standpoint: Evidence from before and after the expansion shows that the Medicaid expansion improved access to preventive and chronic disease care, and studies have linked it to improved health outcomes, including earlier diagnosis and care for cancer and opioid addiction.

However, the Medicaid expansion was not accepted in every state, and it has remained deeply unpopular among many conservative politicians. Recently, the Trump administration has signaled its willingness to overhaul the Medicaid system by allowing states to impose, for the first time in the program’s history, something called “work requirements” as a condition for receiving Medicaid benefits. You’ve likely heard about these in the news or in conversations. Here’s a quick overview of how they’re supposed to, well, work, and why many experts think they’re a terrible idea.

Work requirements explained

Work requirements represent one of the largest changes to the Medicaid program since its inception. So far, three states (Kentucky, Indiana, and Arkansas) have received approval to pursue work requirements, which comes in the form of a waiver from the federal government. Seven more states have applied for such waivers. In Kentucky’s version, able-bodied adult Medicaid beneficiaries who are not primary caregivers or pregnant must now complete 80 hours of “community engagement” per month to maintain their coverage. (Arkansas also requires 80 hours per month; in Indiana, the requirement is an average of 20 hours per month after the first 10 months of drawing benefits.) Although Kentucky uses the term “community engagement,” the qualifying “work” can also include time spent looking for a job, participating in job training, volunteering, and participating in substance abuse treatment.

Proponents of the waivers argue that they offer states greater flexibility in administering their Medicaid programs and encourage able-bodied adults to work or otherwise contribute to their community. However, many public health and health policy experts disagree with this assessment. Experts note that the idea that Medicaid recipients are lazy or unwilling to work is simply inaccurate; indeed, six out of ten non-disabled adults on Medicaid are already working or unable to work due to illness, caregiving responsibilities, or school.

It’s the already-working recipients of Medicaid who have public health experts especially worried. Although the Department of Health and Human Services, which oversees the Medicaid program, has suggested that states allow for a variety of activities to fulfill work requirements—including working, volunteering, job training, and caregiving—there is no explicit requirement as to what states can allow or disallow. Thus, some states could seek and obtain waivers that would have much more narrow definitions of acceptable work. In addition, the very people currently dependent on Medicaid are also the people most likely to have low-paying and intermittent employment that may not add up to the required number of monthly hours.

Another problem: In states that have very low income limits for Medicaid—among the states that have opted not to expand Medicaid, for example, the median limit in 2018 is 43 percent of the FPL, or $8,935 per year for a 3-person household that includes at least one child—a parent who takes a low-paying part-time job in order to meet work requirements may find that they now make too much money to qualify for benefits. Many individuals on public assistance also face barriers to employment such as lack of job training, mental or physical health problems, limited work experience, or criminal histories. These could prohibit the person from obtaining the required hours of employment.

Also at issue is whether instituting work requirements for Medicaid will actually save states any money. Many insurance experts say it won't. For one thing, there are significant administrative expenses associated with tracking enrollee work hours and documentation; Medicaid is not currently equipped to handle this type of administration. In the end, some states may decide not to impose work requirements simply because of the added administrative costs, which would ultimately offset any potential savings.

In the meantime, the cases of Kentucky, Arkansas, and Indiana will be important to watch to see whether work requirements will have the adverse effects that experts fear on individuals’ eligibility status—and if so, what the corresponding uptick in the uninsured population will mean for those states’ overall health.

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