News & Commentary

Making Work a Must-Do for Medicaid

Kentucky was the first state to take advantage of the Trump administration’s invitation for states to set work requirements for Medicaid, but others are sure to follow.

The political appeal of work requirements is undeniable. Surveys show that more than 80% of Republicans favor them. That’s not surprising. But so do a majority, albeit a small one, of Democrats.

When CMS Administrator Seema Verma made the announcement about the work requirements last month, several questions immediately bubbled to the surface.

One is the issue of how many Americans will actually be affected. Partly because of Medicaid expansion, roughly one in every five Americans now get their health insurance through a Medicaid program. That works out to be about 62 million people, although that number includes children covered under CHIP and so-called dual eligibles who are also covered by Medicare. Moreover, the work requirement is not being imposed in one fell, federal-level swoop. It is a state-by-state proposition that will happen in states that pursue the work requirement through a Section 1115 waiver, the strings-attached permission that CMS grants to states so they can tinker with Medicaid design that departs from federal rules.

Work status of Medicaid enrollees, 2016

Using data from the federal government’s Current Population Survey, the Kaiser Family Foundation calculated that 60% of the 24.6 million Medicaid enrollees, ages 19–64, not receiving Supplemental Security Income (SSI) were working full- or part-time.

Work status of Medicaid enrollees, 2016

Source: Kaiser Family Foundation, “Understanding the Intersection of Medicaid and Work,” updated January 2018

More to the point, the fact is that many Americans covered by Medicaid are already working; the belief that Medicaid is a program only for people who don’t want to work or who are stuck in the throes of poverty is misguided and outdated. For a combination of reasons, including employers pulling back from employment-based insurance and the increasing number of people who work as self-employed contractors, Medicaid has become a health insurance program for low- and moderate-income people. A Kaiser Family Foundation report on Medicaid and work that was updated last month says that a well-regarded federal government survey showed that in 2016 about 25 million adult Americans ages 19 to 64 who were not disabled (i.e., they weren’t eligible for Medicaid because they received Supplemental Security Income [SSI]), were enrolled in Medicaid programs and that 60% of them were working, 42% of them full time. Findings of a study of Medicaid beneficiaries in Michigan reported in JAMA Internal Medicine in December 2017 are consistent with the Kaiser report. Renuka Tipirneni, MD, and her colleagues at the University of Michigan Medical School found that half (48.8%) of Healthy Michigan Plan enrollees who responded to a telephone survey said they are employed or self-employed. Roughly a quarter (27.6%) said they are out of work and 11.3% said they were unable to work.

The guidance that CMS issued last month for Section 1115 work requirements does acknowledge that some of the Medicaid beneficiaries who are not working are unable to do so. The guidance, for instance, says that states must create exemptions for people who are “medically frail” and “should also exempt from requirements any individuals with acute medical conditions.” People with opioid and other drug problems might also be relieved of the work requirement. The guidance says states must make sure that people with opioid addiction and other substance use disorders have access to Medicaid coverage and treatment services and that “reasonable modifications” be made for them, such as counting time spent in treatment toward any work requirement. And the work requirement itself may not be as hard-edged as it sounds. The guidance suggests that a range of activities be considered as satisfying the work and “community engagement” requirement, including volunteer work in areas with high unemployment or for people with young children or elderly family members.

Critics of the work requirement make three points. First, that work requirement creates paperwork and other hassles for Medicaid recipients who are working. Therefore, a sizable percentage of people may lose Medicaid coverage because of bureaucratic and computer-related hassles, not because they are unwilling to work (or volunteer). Plus enforcing work requirements will require states to spend some money on policing them. Second, that the rationale for work requirement confuses causation and correlation. The guidance points to research showing that working and employment have health benefits. Critics say that is like saying that rain causes clouds, and the studies of work and health also show correlation between poor health and lack of employment. Finally, that the work requirements for other programs tend to show a short-term effect, which creates a nice little feedback loop that stokes their political popularity. But lengthen the time horizon and the results aren’t so clear. Chronic unemployment has deeper causes that work requirements on individuals don’t touch, say the critics.

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