Indiana’s Medicaid Work-Requirement Program Is Expected to Cause Tens of Thousands to Lose Coverage
Earlier this year, Indiana implemented a Medicaid work-requirement initiative, called Gateway to Work, authorized by the Centers for Medicare and Medicaid Services (CMS) as an extension of its Section 1115 Medicaid demonstration project. Similar initiatives in Kentucky, Arkansas, and New Hampshire have been suspended by federal district court decisions, largely because many people lost insurance coverage in Arkansas and were expected to lose coverage in Kentucky and New Hampshire. This is contrary to the central objective of Medicaid to provide insurance coverage. On September 23, a lawsuit challenged Indiana’s demonstration project approval.
Officials in Indiana claim that no one will be harmed in their experiment. The Washington Post reported that “the state’s secretary of health has made a bold promise that not a single person will lose coverage under its ‘Gateway to Work’ program.” An early independent assessment found that Indiana’s work requirements were being implemented more carefully than those in Arkansas.
But will a more slowly paced initiative really do no harm, as Indiana claims? It is true that no one has lost Medicaid coverage yet in Indiana, but this is simply because Indiana is not scheduled to suspend Medicaid cases until January 2020. If the first coverage suspensions go forward in January, people who did not meet the requirement in 2019 will lose Medicaid benefits.1 When Indiana applied for the project, the state estimated that about 130,000 Medicaid participants would neither meet work requirements nor qualify for exemptions when the project debuts. Of these, the state estimated that 75 percent would be enrolled long enough to face suspension and 75 percent of this group would change their activities and begin meeting the requirements, indicating that the remaining 25 percent, about 24,000, would lose Medicaid coverage. We estimated that when the project is fully implemented, about 53,000 to 88,000 Medicaid participants would lose coverage, equal to 15 percent to 25 percent of the target population (i.e., parents and adults ages 19 to 50 who gained coverage under the expansion).
The evidence that work requirements result in large coverage losses is compelling, based on what happened in Arkansas and also all across the country when similar requirements were imposed in the Supplemental Nutrition Assistance Program (SNAP) and in Temporary Assistance for Needy Families. In a recent study, we analyzed data from more than 2,400 counties from 2013 to 2017, when work requirements for able-bodied (i.e., not disabled) adults without dependents were reintroduced in SNAP. On average, more than one-third of these adults lost benefits. This was not a one-time phenomenon that occurred because of a rushed implementation process in one state or county; it happened over and over again across many years in red and blue states alike. In fact, after Indiana imposed work requirements in SNAP in 2015, the state reported that the number of able-bodied adults without dependents in the program fell by 68 percent within six months.
Indiana is rolling out the Medicaid work requirement more slowly than Arkansas did. However, Indiana will still require 80 hours of work activities per month or demonstration of an exemption, like other states with similar programs, and its policies will affect far more beneficiaries than those of many other states. Arkansas, Ohio, and Arizona’s programs would apply work requirements to 19-to-49-year-old adults, the same age range used in SNAP. Most states plan to exempt either all adults living with children or one parent of a child under 18 per family. Indiana, in comparison, imposes work requirements up to age 59 and seeks to exempt one parent of a child up to age 13 in each family. Finally, unlike most other work-requirement states, Indiana is not distinguishing between adults with traditional Medicaid and those covered under the expansion. Traditionally eligible adults — such as parents with incomes below 25 percent of poverty — could lose their health insurance, as well as those eligible under the expansion.
Many people who lose SNAP or Medicaid because of work requirements are actually working or eligible for exemptions, but lose benefits because the rules and paperwork are too confusing. Although Indiana’s program delays the impact, the work requirement is nevertheless designed to terminate medical coverage for people who either do not meet the requirements or fail to complete the paperwork. The program could impose great hardship on very poor people and those with major medical needs. While the state claims that the work requirements will help Medicaid beneficiaries get jobs, a substantial body of research has found little evidence that work requirements are effective in promoting employment or reducing poverty.
If Indiana does move forward, there must be a sound evaluation of the demonstration. The federal government requires an approved evaluation plan for all Section 1115 demonstration projects. Indiana submitted a draft evaluation plan in November 2018; CMS responded with several criticisms in March 2019 and requested a revised evaluation plan by May. As of yet, no revised evaluation plan has been posted.
1 People whose coverage is suspended lose Medicaid benefits but may request reenrollment by showing they now meet work requirements. However, if they are suspended when their annual recertification is due, they will need to reapply.