What Might a Medicaid Work Requirement Mean?

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    The Trump administration has made work requirements a hallmark of its Medicaid policy proposals
    States will have to decide if Medicaid work requirements are worth the financial and human cost

The Trump administration has made work requirements a hallmark of its Medicaid policy proposals, including the idea in the just-released 2018 U.S. Department of Health and Human Services (HHS) budget proposal, and as part of its Medicaid demonstration agenda. The House-passed American Health Care Act (AHCA) likewise allows states to make having a job a requirement for gaining Medicaid eligibility.

While the administration’s HHS budget proposal lacks detail, presumably, like the AHCA, it would incorporate the work requirement rules found in the Temporary Assistance for Needy Families (TANF) program, which provides temporary cash welfare assistance. These TANF policies condition federal funding to states on meeting work targets for TANF recipients; federal law offers only a handful of exemptions for people with disabilities, new mothers, and parents of very young children.

While there will be an estimated 76 million Medicaid beneficiaries in 2018, research suggests that a Medicaid work requirement would affect about 22 million low-income, working-age adults, two-thirds of whom are either working or looking for work. The research finds that nearly all other enrollees either have serious health problems or are caring for family and that less than 5 percent of the 22 million potentially affected beneficiaries are voluntarily not working. These findings suggest that states would operate costly work programs—something the AHCA recognizes by offering enhanced federal payments for administrative costs—that nonetheless would have virtually no impact on eligibility while at the same time producing substantial enrollment and retention barriers for millions.

How Might States Use Work Requirement Flexibility?

In a letter HHS Secretary Tom Price recently sent to governors, he singled out work requirements as a Medicaid demonstration goal. State 1115 Medicaid demonstrations, which allow the federal and state governments to test innovations in Medicaid, along with recently enacted state legislation, offer insight into the kinds of policies more states would consider if Congress passed a law permitting Medicaid work requirements without the need for special waivers. Twelve states have applied for 1115 waivers that include work requirements; states also have addressed the issue legislatively in both Arkansas (enacted) and Florida (proposed but not enacted in final law) (see table below).

States’ proposed approaches to work requirements are highly variable. Some require work only for the Medicaid expansion population (working-age adults ineligible under traditional program rules and with incomes up to 138 percent of the federal poverty level, or around $16,000 a year). But others such as Maine, Wisconsin, and Florida—which have rejected the expansion—would include the traditional Medicaid adult population as well. This population includes pregnant and postpartum women, very poor parents, adults with disabilities, medically needy people, and women eligible for Medicaid because they are receiving treatment for breast or cervical cancer.

States’ approaches to work requirements tend to mirror TANF policies, although some add to the standard TANF exemptions. Some states appear to define disability more broadly than traditional program rules would allow, including people with short-term health crises such as active treatment for drug addiction, or medical “frailties.” Other examples of additional exemptions include Wisconsin (which would exempt certain college students) and Pennsylvania, whose 1115 proposal (set aside in 2015 in favor of a simple state expansion option) would have exempted domestic violence victims.

Certain states have proposed an exemption approach that would give them highly selective discretion; for example, Florida would have exempted people who have “diligently” tried to comply but who face “extraordinary” barriers to employment. Not only would such a standard require additional administrative resources to make determinations, but its impact could vary by subpopulation or community, and the potential for discriminatory application may be heightened.

Congress may yet decide to make work requirements a state Medicaid option. If so, states will not need demonstration authority, but will need to evaluate whether adding such a requirement is worth its human and financial cost. Along with being expensive to enforce, work requirements could trigger enrollment denials and delays or increase coverage interruptions that in turn endanger the health of people in need of medical care. As for 1115 Medicaid work demonstrations, it is difficult to understand why the Centers for Medicare and Medicaid Services would support such a policy shift. Adding layers of eligibility requirements that appear to lack merit arguably is in direct conflict with Medicaid’s fundamental program objective: to insure necessary care for people who need it.

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Publication Details

Publication Date: May 31, 2017
Authors: Sara Rosenbaum, Sara Rothenberg, Sara Schmucker, Rachel Gunsalus
Contact: Sara Rosenbaum, Harold and Jane Hirsh Professor of Health Law and Policy, Milken Institute School of Public Health at the George Washington University
E-mail: sarar@gwu.edu
Citation:
S. Rosenbaum, S. Rothenberg, S. Schmucker et al., "What Might a Medicaid Work Requirement Mean?" To the Point, The Commonwealth Fund, May 31, 2017.

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