Medicaid ‘work requirements’ won’t improve health outcomes

Last week, the Trump administration made good on its promise to reverse longstanding Medicaid policy by permitting states to exclude from Medicaid coverage beneficiaries who do not work or participate in work-related activities. Then-Health and Human Services (HHS) Secretary Tom Price and CMS Administrator Seema Verma announced this policy goal in March, and ten states have asked CMS to permit them to impose Medicaid work requirements  through 1115 waivers. HHS approved the first of these proposals, from Kentucky, last Friday.

This policy turns Medicaid’s long standing role in supporting employment of low-income people on its head. By covering health care services and medications, having Medicaid coverage gives individuals the freedom to seek, obtain and keep jobs.

{mosads}If those jobs do not come with affordable employer-sponsored insurance, as many low-wage jobs do not, Medicaid steps up. Under HHS’ new policy, people will lose their health insurance if they do not work, seek employment, engage in training or similar activities, or if they simply fail to complete the processes required to document their work-related actions.

In other words, Medicaid is no longer a helping hand extended to people who seek financial independence. It is the rug that gets pulled out from beneath the feet of the person who may be getting ready to look for a job.

HHS’ vehicle for this new policy is waiver authority established in section 1115 of the Social Security Act, which authorized Medicaid. Section 1115 waivers are a longstanding tool used by individual states to pilot approaches that depart from federal requirements and by administrations of both political parties for initiating new Medicaid policies.

Using this authority requires HHS to answer two questions: Does penalizing people for not working support the objectives of the Medicaid program, which are reflected in federal law? And, will these new penalties demonstrate the impact of a new approach that will inform policy research about which Medicaid policies are and are not successful?

HHS’ answer to both questions appears to be “yes,” but a shorter, better answer would be “no.” The objective of the Medicaid program, simply stated, is to provide low income people with health and, if needed, long- term care coverage. HHS’ interpretation departs from its historic posture that work requirements do not meet the objectives of the program.

Promoting economic self-sufficiency may be a worthwhile policy goal, but it is not a core objective of the program and should not subvert the goal of providing health coverage to low-income people. This clear interpretation of the law underpinned the decision made in the Obama administration made to not to authorize states to condition Medicaid eligibility on work participation, but to instead support state efforts to promote enrollment of Medicaid beneficiaries in job training.

HHS cites as precedent for its new coverage penalties Medicaid’s historically strong role in promoting employment of and independent living among low-income people with disabilities. But this also misinterprets federal law.

Medicaid coverage of low-income people with disabilities allows states to offer training, subsidized work, and placement services to help with workforce transitions; it does not permit coverage termination for failure to transition. Moreover, starting in the late 1990s, Congress extended Medicaid eligibility to people with disabilities whose income exceeds Medicaid upper limits.

These expansions were explicitly established to ensure that people are not penalized with loss of coverage when their income increases when they start working. In other words, work follows Medicaid coverage, not the other way around.

Nor does HHS’s new approach advance research and evaluation. An evaluation of work penalties is likely yield little new information. HHS argues that penalizing people for not working by ending their Medicaid coverage will improve health outcomes.

But extensive research has already documented the gains in access, outcomes and health that low-income people experience when they gain Medicaid coverage and the reductions that accompany loss of Medicaid coverage.

Penalizing people by taking away their health coverage if they do not work or participate in employment-related activities is extremely unlikely to change the basic calculus that loss of health coverage brings with it loss of health.

People climbing the economic ladder need supports, including education, job training, and child care. And they need and want the peace of mind, financial security, and improvements in health that having health coverage can provide. “Give me the ability to seek employment without worrying about my health,” a Medicaid beneficiary in Ohio declared to state surveyors earlier this year CMS’ new guidance does the opposite, and will set back this and many other beneficiaries’ efforts to achieve health and financial well-being.

Vikki Wachino is principal of Viaduct Consulting, which advises mission-driven health care organizations Medicaid policy, strategy and operations.  She was deputy administrator and director of the Center for Medicaid and CHIP Services at the Center for Medicare & Medicaid Services from 2015 to 2017.