Medicaid Work Requirements Spur Uncertainty, Legal Challenges

Experts caution there could be effects on everyone in the program, not just the intended targets.

Kentucky Gov. Matt Bevin meeting with President Trump at the White House on Jan. 11.
AP Photo/Carolyn Kaster
Erin Durkin
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Erin Durkin
Jan. 17, 2018, 8 p.m.

The Trump administration’s move allowing states to impose work requirements in Medicaid for the first time could have a broader impact on Americans in the entitlement program than intended, experts warn, with the policy shift leading to an increased chance of disenrollment for many patients.

Potentially 1.7 million people could be directly affected by the change, according to estimates from the Kaiser Family Foundation. Under the pathway laid out for states last week, the Centers for Medicare and Medicaid Services will permit states to test work requirements for non-elderly, nonpregnant adult beneficiaries who are eligible for the program on a basis other than disability.

A day later, Kentucky became the first state to get a program approved that would require all able-bodied working-age adults to clock in at least 80 hours a month. Gov. Matt Bevin’s office described the program as a way to improve participants’ health and strengthen Medicaid’s long-term fiscal sustainability.

Although the requirements would apply only to certain beneficiaries, experts caution they could end up affecting all populations in Medicaid and result in the program dropping people who need care.

Most of the non-elderly Medicaid adults either are working already or face significant barriers to work, according to Kaiser, meaning the requirements would be imposed on only 7 percent of the population. But there are implications for everyone due to the documentation required.

“There is a real risk of eligible people losing coverage due to their inability to navigate these processes, miscommunication, or other breakdowns in the administrative process,” stated Kaiser in a brief released Tuesday. “People with disabilities may have challenges navigating the system to obtain an exemption for which they qualify and end up losing coverage.”

The overall effect of the requirements will depend on the way states implement them, Avalere Health President Dan Mendelson said. “It’s conceivable that you could stimulate some individuals to work that hadn’t been working before and that it would have a positive effect, but it’s equally conceivable that the net effects of this will result in denial of care to people who really need it,” he said.

Some experts expressed concern that the exemptions outlined in the CMS guidelines are not strong enough to ensure that people who cannot work won’t fall through the cracks. The guidance indicates that people who are eligible for Medicaid based on disability should be exempted, but that’s a narrow category, said Hannah Katch, senior policy analyst at the Center on Budget and Policy Priorities.

“People with a mental-health disorder, someone who was injured at work and can’t work, someone with uncontrolled diabetes who sometimes can work but sometimes not—none of those people would meet that definition, and so any of them could lose their health coverage as a result of this policy,” Katch said.

CMS’s restriction on states using Medicaid funds to remove challenges to work, such as child care or transportation, has also sparked criticism from opponents. “The bottom line here: This policy is not about helping people work; it’s just about taking health coverage from people who are unemployed,” Katch said.

Some people could also become ineligible for Medicaid in certain states by working at minimum wage, the Kaiser brief notes—and they could potentially be left without an employer-sponsored alternative.

But the change to states’ Medicaid programs does not carry the permanence that a change in statute would. This is because states are using a waiver process that allows them to get the requirements approved by the Health and Human Services Department as a so-called demonstration project.

“I think we’ll see a variety of different approaches, and the beauty is that this period will now give us some experience and that hopefully will inform longer-term policy changes,” said Nina Owcharenko Schaefer, who recently served as senior counselor to the HHS secretary and is now at the Heritage Foundation.

This mechanism, however, may also prove to be the weak spot in the federal government’s strategy, as legal questions have already started to arise in the days following the guidance’s release.

Expect litigation in the wake of the Kentucky waiver, the National Health Law Program warns, with opponents arguing it does not promote the objectives of Medicaid.

“While we are still reviewing the details of this approval … the action appears designed to achieve significant cuts in Medicaid enrollment rather than Medicaid’s stated purpose of furnishing medical assistance to low-income people,” NHeLP Legal Director Jane Perkins said in a statement.

Bevin, however, on Tuesday signed an executive order saying that Kentucky will end its Medicaid expansion if any part of the waiver is stalled in the courts.

“[A]ny delay in the implementation of the Waiver due to judicial action will cause fiscal harm to the Commonwealth and will prevent Medicaid beneficiaries from realizing the benefits under the Waiver,” the order stated.

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