March 13, 2018

Medicaid Work Requirements Will Create More Problems Than They Solve

Since efforts to repeal the ACA stalled out in Congress, the Trump Administration has used its administrative authority in an attempt to reshape Medicaid to be more in line with conservative arguments that employment is linked to better health outcomes and helps move people off Medicaid and out of poverty.

The Administration is giving the green light to states to condition Medicaid eligibility on meeting a work and/or community engagement requirement. Guidance from the Centers for Medicare & Medicaid Services has expressed a preference for following existing federal program work requirements found in programs like the Temporary Assistance for Needy Families (TANF), and the Supplemental Nutrition Assistance Program (SNAP). CMS has also indicated that they will allow states to account for local conditions such as high unemployment in certain areas and other factors such as “lack of viable transportation.”

To date, CMS has approved three state demonstration waivers – Arkansas, Kentucky and Indiana – incorporating work requirements; seven other states reportedly have waivers pending. Each carries a combination of additional provisions that may affect the eligibility or affordability of coverage. Approved waivers have exemptions for work requirements for “medically frail” adults, certain caregivers, students and pregnant women.

The requirements themselves vary in each state, and guidance by CMS does not specifically mandate that these populations be exempt from work requirements. Arkansas and Kentucky both incorporate “lockout periods” if enrollees fail to comply with the requirements. Some states* have included “lifetime coverage limits” in their demonstration waivers. Many questions remain as to how closely CMS will monitor states’ waiver implementation to ensure they do not create barriers to care for pregnant women or the medically frail and disabled. It also remains to be seen how closely CMS will monitor much of the administration of the waivers themselves, since the agency has made clear they will not provide federal resources to states to administer work requirements

Clinton-era efforts to reform welfare culminated in the Temporary Assistance for Needy Families program, which gave states greater ability to tie welfare to work. TANF was initially praised for increasing employment without raising the poverty rate. Researchers have since found, however, that employment gains were often temporary, and five years after implementation enrollees who were exempt from work requirements had employment rates roughly equal to those who weren’t.

The premise ostensibly behind CMS’ January 2018 guidance promoting implementation of work requirements is that most Medicaid enrollees are not employed and would appreciate the push from the state to gain employment, as it would improve their health and self-confidence. However, most Medicaid enrollees work already, or are part of working families, and many of those who are unemployed list disability or illness as the primary reason for their employment status.

The arguments against work requirements are impressive:

They’re ineffective – Medicaid coverage often makes it possible for people to go to work or transition into new careers. Access to Medicaid coverage has allowed people with health-related barriers (such as asthma or rheumatoid arthritis) to get the care and medications they need to get and keep sustained employment. There is no data to support the claim that the ACA has negatively impacted labor market participation; research indicates that Medicaid coverage supports work.

They’re burdensome – Medicaid work requirements add a layer of administrative complexity for people, providers, the state and in some cases MCOs. Work requirement waivers often stipulate that workers must continually prove employment status, income and/or hours worked per week, or they risk losing their insurance and even being “locked out” of healthcare coverage for a period of time as a penalty for non-compliance.

They don’t move people out of poverty – 60% of non-elderly adults without SSI enrolled in Medicaid are already working (either full-time or part-time and for more than half the year) and are still eligible for ACA adult Medicaid. That’s nearly 15 million people who are working at poverty-level wages in low-status jobs. More than half of Medicaid enrollees who work (roughly 7.6 million) are working full-time for the full year and have income below 138% of the federal poverty level (or $16,642 for an individual).**

And yet, 10 states are actively pursuing this strategy or have already had work requirements approved via Section 1115 demonstration waivers.

This isn’t the state’s first rodeo with work requirements. In 1996, states implemented work requirements as a part of TANF. Many claim Medicaid work requirements could similarly be implemented. Twenty years later, however, states have far fewer dollars for work-related supports than they did in 1996. The Medicaid population is also much larger and more medically complex than the TANF population. TANF spending on work activities and supports – which has often been criticized as too low to meet the goals of moving people out of poverty – yet it far exceeds estimates of state Medicaid program spending to implement a work requirement. It is therefore unlikely that states will be able to support adequate infrastructure to manage reporting requirements, much less invest in employment activities and supports for Medicaid enrollees.

If states really want to integrate employment supports into Medicaid, work requirements are not the way to do it.


Learn more about Medicaid state waivers, and how citizens can be involved, in our Medicaid flexibility series

* Arizona, Kansas, Utah and Wisconsin.
** Full-time is at least 35 hours a week; and the entire year is 50 weeks a year.

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