The Trump administration’s move Thursday to require Medicaid enrollees to work for their health coverage touched off an ethical and ideological stand-off over the seemingly conflicting government role in aiding the poor and the desire to move those receiving assistance toward self-sufficiency.
Supporters say the Medicaid work requirement will foster an improved work ethic, cut government dependency and weed out people who don’t really need the assistance. But critics say the requirement will be expensive to administer, provide an unnecessary barrier to coverage and penalize people who can’t work due to undiagnosed medical problems.
Most expect the new policy to face a legal challenge.
Nonetheless, Kentucky is expected to be the first state to impose a work mandate, followed perhaps by Vice President Mike Pence’s home state of Indiana.
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Along with work requirements, Kentucky wants permission to impose premium contributions, enrollment waiting periods and “lockouts” that bar those with incomes above the poverty level from re-enrolling in Medicaid for six months if they don’t pay their premiums on time.
State officials estimate that Kentucky’s waiver proposals would cause more than 50,000 Medicaid recipients to lose coverage over the five-year waiver period. That would help the state save more than $2.2 billion, officials estimate.
“Kentucky cannot afford the cost of the Medicaid expansion program without this demonstration waiver,” the state’s waiver application said.
Kentucky’s proposed work requirement would apply to all non-disabled adults ages 18 to 64 with no dependents.
In Thursday’s letter to state Medicaid directors, the U.S. Department of Health and Human Services outlined rules allowing states to require “able-bodied” working-age adults to either be employed, in school, caring for a loved one in order to receive Medicaid benefits. People with disabilities, the elderly, children and pregnant women will be excluded from the new requirement.
“Community engagement” activities like skills training, education, job searches and volunteer work will be allowed to substitute for actual employment.
“States have the opportunity to help individuals improve and enhance the skills that employers truly value,” said a statement from Medicaid administrator Seema Verma. “People who participate in activities that increase their education and training are more likely to find sustainable employment, have higher earnings, a better quality of life, and, studies have shown, improved health outcomes.”
Ten states have already sought federal permission to impose Medicaid work requirements through federal waivers that allow them more flexibility to create policies designed to promote financial responsibility among enrollees.
Tying health benefits to work requirements would be a first for Medicaid, the state and federal health program for low-income Americans. The Obama administration consistently denied state requests to do so, saying the policy didn’t meet a basic requirement of the waiver program: to further the objectives of the Medicaid program, such as improving coverage, health outcomes and access to providers.
But in the latest reversal of an Obama-backed policy, the Trump administration is expected to approve requests for work requirements from Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah and Wisconsin.
The rule change, however, renewed a debate over the propriety, if not the feasibility, of enforcing a work requirement for a health program based on poverty.
HHS’s Verma stressed the administration was responding to state officials who have insisted the requirement would bolster self-sufficiency for both the programs and the individuals benefiting from them.
“Our policy guidance was in response to states that asked us for the flexibility they need to improve their programs and to help people in achieving greater well-being and self-sufficiency,” Verma added. ”Our fundamental goal is to make a positive and lasting difference in the health and wellness of our beneficiaries, and today’s announcement is a step in that direction.”
Health care advocates were immediately critical of the justification.
“If proponents of work requirements are serious about helping people find work, they would invest in skill training and workforce development programs rather than increasing red tape and making it harder for people to access health care,” said a statement from Suzanne Wikle, senior policy analyst at the liberal Center for Law and Social Policy.
Leonardo Cuello, director of health policy at the National Health Law Program, added the new policy was "legally suspect" because HHS allegedly skirts the established notice and public comment periods under which major policy changes are typically introduced. He said the new regulations are "pulling a 180 on established policy."
Stakeholders have already provided public comment about their state's work requirement proposal based on rules that were in place at the time, Cuello said. Using new rules to evaluate those waiver requests undermine the notice and comment process that’s required by law, Cuello said.
Legal action against HHS is inevitable after a state's work requirement request is approved, Cuello added.
The administration’s policy, though, found support from business groups. Freedom Partners executive vice president Nathan Nascimento said that prioritizing assistance to those most in need bolsters the effectiveness of the Medicaid program.
“Without this flexibility, overcrowding, low reimbursement rates and escalating costs are forcing some states to reduce benefits for the most vulnerable to pay for the expansion to those who aren’t truly in need,” Nascimento said in a statement.
Prodding people to engage them in work-related activities is fine, said Gail Wilensky, a senior fellow at Project HOPE who ran the Medicaid program from 1990 to 1992 under President George H.W. Bush. But Wilensky cautioned the policy may face challenges from people with substance abuse problems, limited skills or limited education who have difficulty finding jobs. And those who lose coverage could wind up in hospital emergency rooms receiving indigent care in which taxpayers get stuck with the bills.
"You might find yourself swapping a tightly managed narrow-network Medicaid program for a fragmented, expensive emergency room care," said Wilensky, a conservative Republican. “I can see this working better for cash programs like Temporary Assistance for Needy Families or food stamps."
According to the Kaiser Family Foundation, 35 percent of non-working Medicaid enrollees say illness or disability is the main reason for their unemployment. Twenty-eight percent reported care-taking obligations, while 18 percent couldn’t work because they were in school. Women made up sixty-two percent of Medicaid recipients without jobs in 2015, Kaiser reported.
Wikle, of the Center for Law and Social Policy, said the work requirement puts health coverage — a valuable support for people seeking employment — at risk. “When people are not healthy or able to access needed medications they are less likely to be able to work," her statement said.
A new report by Community Catalyst finds the new work requirements would be unworkable in states that didn’t expand eligibility to Medicaid under the Affordable Care Act. In non-expansion states, a person working 20 hours per week at minimum wage would earn too much money to qualify for Medicaid, but not enough to get financial assistance to buy marketplace coverage, the report found.
“The logic behind this new policy seems straight out of ‘Alice in Wonderland,’ where the administration is saying ‘work is good for your health, but failing to meet a work requirement means you will lose your health insurance,” said a statement from Katherine Howitt, associate director of policy at Community Catalyst.