Work Requirements Inject Politics into Medicaid

On Jan. 11, the Trump administration announced that states may request waivers to the Medicaid program allowing them to impose work requirements on beneficiaries. The next day, Kentucky became the first state in the Medicaid program’s history to avail itself.

The new changes to Medicaid permit states to add a variety of factors to eligibility, which can include satisfying certain work, job training or community service requirements in order to receive Medicaid coverage. Republicans view work mandates as an opportunity to improve Medicaid recipients’ health and financial independence simultaneously. Democrats argue that work requirements are in no way a part of the Medicaid statute.

Medicaid enrollment has swelled since the passage of the Affordable Care Act and now covers over 74 million Americans at a cost of $565.5 billion in 2016, according to the Centers for Medicare and Medicaid Services. This even surpasses today’s Medicare enrollment of 55 million.

A key change to Medicaid under the ACA was to permit many more able-bodied adults with low incomes to become eligible for the program. President Donald Trump’s new policies aim to help participating states reverse these Obama-era policies.

The Commonwealth Fund, which monitors the state programs, has noted that some of the early states seeking a Medicaid waiver have projected a flat (0 percent) to negative 5 percent impact on Medicaid enrollment. In the next 24 months, we should have a better sense for the true impact.

In its Jan. 11 guidance, CMS committed to supporting state efforts that create community engagement requirements for the nondisabled, nonelderly, and nonpregnant adult population. CMS will review each state waiver request on a case-by-case basis.

Shortly after the guidance was released, the Trump administration granted Kentucky’s request to institute work requirements. Indiana and Arkansas were given a green light on Feb. 1 and March 5, respectively. CMS gave the states wide latitude for exemptions, including pregnant women, medically frail individuals, students, and individuals in substance use disorder treatments, among others, and broadly defined work to include job training/search activities, education and volunteer work.

Arkansas will be the first state to implement work requirements in June. The requirements will be phased in, with enrollees ages 30-49 subject to the mandate this year, and enrollees 19-29 years old must comply in 2019. Kentucky’s program is scheduled to start in July and Indiana’s in January 2019.

Under the waivers, adults seeking Medicaid in Kentucky and Arkansas are required to work at least 80 hours per month in order to be eligible. The requirement is similar (20 hours per week) in Indiana.

Kentucky’s waiver also breaks from the traditional Medicaid model by imposing monthly insurance premiums of up to 4 percent of household income adults and parents/caretakers.  This is the highest level of premiums allowed by CMS to date; 2 percent of household income had been the upper limit for monthly Medicaid premiums granted by CMS until Kentucky received its approval.    

Altogether, these new policies are projected to reduce the rolls of Medicaid by 97,000 in Kentucky and 25,000 in Indiana, according to the Medicaid and CHIP Payment and Access Commission.

Seven other states have submitted work requirement waivers to CMS — Arizona, Kansas, Maine, New Hampshire, North Carolina, Utah and Wisconsin — and we expect federal approval of those that mirror Kentucky, Indiana or Arkansas. Governors of another five states — Alabama, Ohio, Louisiana, South Carolina and South Dakota — have said they are exploring work policies in their Medicaid programs. We expect more states to jump on the bandwagon. 

Opponents of work requirements view paperwork burdens as a barrier for individuals to obtain and maintain coverage. Arkansas has the most stringent monthly paperwork requirements. Those who are deemed noncompliant for any three months of the year will be kicked off Medicaid until the following plan year. Kentucky and Indiana are more lenient than Arkansas on the paperwork requirements — individuals who fail to comply with work requirements are able to regain coverage after coming into compliance.  

CMS approved new lockout periods of up to six months in Kentucky and three months in Indiana for beneficiaries who fail to submit renewal paperwork on time. Kentucky will also lock out for six months beneficiaries who fail to report changes in eligibility such as income or employment. Beneficiaries with incomes above 100 percent of the federal poverty level who fail to pay premiums will lose coverage for six months in Kentucky. A similar provision is in place in Indiana.

The Trump administration is being challenged in the courts by three consumer groups that argue that the Medicaid statute does not tie enrollment to employment. Republicans believe the shift in policy promotes the objectives of Medicaid, citing studies that show people with jobs tend to be healthier.

Democrats and health advocacy groups have called the work requirements cruel and said the requirements will make it harder for the most vulnerable to access health care. Kentucky faces a lawsuit attempting to block the requirements altogether.

Despite legal challenges to the Medicaid rollbacks, some conservative states are pushing the federal government to go further. Arkansas is asking CMS for permission to roll back Medicaid eligibility from the state’s current level of 138 percent of the FPL down to 100 percent of the FPL. CMS has not yet responded to that part of the waiver.

Health care policy and the Medicaid program will continue to be political lightning rods. Medicaid recipients may be underrepresented as a voting block and reliant on a coalition of parties for support. As with most federal and state policy in 2018, the future of Medicaid and the waiver programs will probably depend more on outcomes of our next election cycles than anything else.

Ipsita Smolinski is managing director of Capitol Street, where she advises clients on national health care policy and emerging trends.

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