Work requirements may be costly

After the Trump administration gave states permission to impose new restrictions on Medicaid eligibility, Kentucky Gov. Matt Bevin wasted no time.

Within days, Kentucky instituted a rule requiring “ablebodied” adults on the health insurance program for the poor and disabled to complete 80 hours of “community engagement” per month. Paid work, job training, volunteering or being the primary caregiver for children and the elderly count.

Advocates for disabled and low-income people fear that this mandate, which could spread to at least 10 other states, will strip millions of insured Americans of their health coverage.

The states taking this step say it has become increasingly hard to cover their share of Medicaid’s costs. But, based on my research, I believe that the policy is unfair to the most vulnerable and may end up not saving any money.

Medicaid, which covers 20 percent of Americans, is jointly financed. The federal government covered 67 percent of Medicaid’s $553 billion cost in 2016. The states, which administer the program in their borders, foot the rest of the bill.

Many states say that the program consumes more and more of their budgets, leaving less money for other priorities. It’s true: State Medicaid spending, which has risen annually since 2010, spiked by an average of almost 14 percent in 2015.

That’s mainly due to the influx of newly eligible enrollees in the 32 states - including Kentucky - that expanded their Medicaid programs under Obamacare.

Although the pace of new enrollment tied to Obamacare is now slowing down, state Medicaid expenditures are rising faster because states are starting to pay a small and growing share of the newly covered enrollees’ costs.

Kentucky is one of 10 states along with Arizona, Arkansas, Indiana, Kansas, Maine, New Hampshire, North Carolina, Utah and Wisconsin - that had pressed the federal government for permission to make Medicaid eligibility contingent upon work and similar activities. Alabama expressed interest in going this route soon after the government endorsed it.

Bevin, Kentucky’s governor, is threatening to backtrack on its expansion, ending Medicaid coverage for more than 400,000 Kentuckians, if legal challenges against his policy prevail.

While giving this approach a federal seal of approval, Centers for Medicare and Medicaid Services Administrator Seema Verma specified that these new rules should not apply to pregnant women, the elderly, the “medically frail” or people whose disabilities made them eligible for the program.

Verma outlined other optional exemptions for states to consider, such as community service, caregiving, taking classes, job training and getting treatment for substance abuse disorders.

While carving out everyone in these categories would protect Medicaid benefits for many, millions of Americans could still wind up uninsured.

Verma says that Obamacare harmed the states when it gave millions of working-age nondisabled adults the ability to get Medicaid benefits, thereby increasing overall health care spending by government.

Yet as these previously uninsured people get coverage, they are getting more routine care and requiring fewer emergency services, and the federal government is shouldering most of this cost. That means the states are generally not spending more on health care. While the shift to more routine care will help control costs, the states are bound to spend more as the federal government’s share of spending on the Medicaid program declines.

The Medicaid work requirements Verma is encouraging states to impose are new but not novel. The Temporary Assistance for Needy Families welfare program and the Supplemental Nutrition Assistance Program, two other safety net mainstays, already have them.

Those work requirements, according to researchers, may leave some Americans facing extreme economic hardship in the lurch. I also believe that this new mandate may jeopardize beneficiaries’ health in the long term - especially if they become uninsured. Kentucky’s own officials estimate that some 100,000 people could lose their coverage within five years due to the new requirement and added paperwork.

So what would happen if the work requirements become universal?

Most Medicaid beneficiaries already work or are in families where someone else does. Many of the rest would be exempt from these requirements due to disability or other reasons.

But the number of Americans forced to leave the rolls would still be significant. As many as 6.3 million people could lose their coverage, according to a Center for American Progress analysis of Kaiser Family Foundation data.

The requirement that enrollees work or fulfill community engagement requirements in other ways will at best, in my opinion, reduce some spending on Medicaid in the short term as a few people are forced to drop out. Without access to routine care, those who lose coverage will either forego medical assistance or make more expensive trips to emergency rooms.

That is why I believe the government will spend more in the long run. The people who are less healthy than they would have been will, in turn, have more trouble getting and keeping jobs and will earn less money.

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