The Trump administration moved Thursday to allow states to impose work requirements on their Medicaid programs for the first time, the latest alteration of the nation’s health care system through administrative action after Republican efforts to repeal the Affordable Care Act failed last year.
The change will allow states to craft programs that would require Medicaid recipients to prove they are working, training for a job, or volunteering in their communities, according to guidance issued by the Centers for Medicare and Medicaid Services.
Critics say the rules could mean more Americans are left without health insurance. But administration officials argue that the work requirements will strengthen the program and improve health outcomes by encouraging Americans to train for and seek out jobs.
“In a time of heated debate and division, helping Americans at or near the poverty line improve their lives and no longer need public assistance should be a cause that unites us all,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, said Wednesday in a conference call previewing the move. She said the federal government is expected to begin approving state plans for work requirements in “short order.”
The policy shift is a significant departure from the Obama administration, which denied state efforts to impose work requirements in order to boost enrollment rolls. Under the Affordable Care Act, states were permitted to expand their Medicaid programs for low-income individuals at or near the poverty line, providing health insurance to those who would struggle to afford coverage even with tax subsidies provided under the law.
But Trump administration officials said states would only be allowed to impose the requirements on able-bodied and working-age Americans. Those deemed “medically frail” and pregnant women will be exempted, and states must prove they are not inappropriately denying coverage to those with disabilities. The administration is also asking states to provide exceptions for those with substance addictions, and programs may allow time spent in treatment to count toward work requirements.
The changes are an opening salvo in the administration’s push this year to overhaul federal safety net programs, with the White House asking departments and agencies across the government to review eligibility for low-income assistance programs. The White House and House Speaker Paul Ryan had hoped to introduce sweeping legislation to overhaul the nation’s welfare programs, though Trump over the weekend acknowledged the long odds such an effort would face with Republicans clinging to just a two-seat advantage in the Senate.
“It’s a subject that’s very dear to our heart,” Trump told reporters Sunday at Camp David. “We’ll try and do something in a bipartisan way, otherwise we’ll be holding it for a little bit later.”
Ten states — Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah, and Wisconsin — have proposed adding requirements for work or community engagement, according to CMS. Ohio has previously proposed a similar requirement, which was rejected by the Obama administration.
About 40% of nonelderly, non-disabled adults who have Medicaid coverage aren’t working, according to an analysis from the Kaiser Family Foundation. But many of them are either in school or staying home to care for a family member, while about a third are too sick to work. Just 6% say they want to work but can’t find a job.
CMS declined to say how many people could be potentially impacted by the work requirements, saying it would depend how states designed the programs.
The requirements will likely be subject to court challenges.
Conservatives have long argued that social programs can be a disincentive to work and favor making safety net benefits contingent on working. In 1996, a welfare reform bill passed by the Republican-controlled congress and signed by President Bill Clinton, a Democrat, added work requirements to welfare benefits, among other changes to the welfare program now known as Temporary Assistance to Needy Families.
Medicaid, unlike cash welfare payments, isn’t a disincentive to work, because it doesn’t provide people with funds they’d need to pay rent or buy food, said Jeff Grogger, an urban policy professor at the University of Chicago. He said it’s not clear what problem a Medicaid work requirement would solve, and that there are better ways to help people find jobs or reduce the number of people receiving Medicaid.
“It’s not like Medicaid is providing some kind of alternative lifestyle that’s attractive and keeps people out of the workforce,” he said. “If we had fewer sick people and fewer poor people, that’d lower the Medicaid rolls. Thinking in those terms is more productive.”
Medicaid was historically a benefit that went hand-in-hand with welfare for the disabled and low-income single mothers and their children. In the 1980s and ’90s many states expanded eligibility to pregnant women, regardless of income or marital status. The ACA allowed states to expand eligibility to low-income adults without children, with the federal government covering most of the cost.
The successive expansions have turned the program into the largest source of health insurance for Americans. About 72 million people, more than one-fifth of the American population, had Medicaid coverage in 2017, according to CMS. About 39% of them are children, and another 23% are blind or disabled. The remaining adults, about 28 million people, include 12 million who became eligible for Medicaid under the ACA.
States would have to build new systems to determine who is subject to work requirements and verify whether beneficiaries fulfilled them, said LaDonna Pavetti, vice president at the Center on Budget and Policy Priorities, a left-leaning think tank.
That could deny benefits to people who have severe barriers to work, such as those with mental illness or substance abuse problems. “The most vulnerable people are the ones who need Medicaid coverage the most, and they will lose it,” Pavetti said. Even people who are employed might lose benefits if they failed to submit pay stubs or other documentation.
—Read Three Republicans Reject AHCA at House Budget Markup on ThinkAdvisor.