Updated House ACA Repeal
Bill includes Medicaid Work Requirement
An amendment would allow states, starting as soon as October 1, 2017, to impose as a condition of eligibility an onerous work requirement on all adults who are not elderly, disabled, or pregnant.
Updated House ACA Repeal Bill Deepens Damaging Medicaid Cuts for Low-Income Individuals and Families
March 21, 2017, by Edwin Park Judith Solomon Hannah Katch
Medicaid Work Requirement
The Manager’s Amendment would allow states, starting as soon as October 1, 2017, to impose as a condition of eligibility an onerous work requirement on all adults who are not elderly, disabled, or pregnant, something states can’t do under current law. The work requirement could apply to a married mother of a young child, a former foster child attending college, or an individual caring for an aging parent. States would receive a five percentage point increase in the federal match for their administrative costs to implement the work requirement. The work requirement is modeled somewhat on the work requirement in the Temporary Assistance for Needy Families (TANF) program, which has not increased long-term employment among low-income families or reduced poverty but has led to a sharp decrease in the share of low-income families receiving assistance.
Congressional Republican support for a Medicaid work requirement is based on the false premise that large numbers of Medicaid beneficiaries who can work have chosen not to. But the overwhelming majority of low-income adults on Medicaid already work. Nearly 8 in 10 non-disabled adults with Medicaid coverage live in working families, and nearly 60 percent are working themselves. Of those not working, more than one-third reported that illness or a disability was the primary reason, 28 percent reported that they were taking care of home or family, and 18 percent were in school.
Nonetheless, if adopted by states, this provision would likely reduce the number of eligible people who enroll in Medicaid by barring coverage to those who are unable to work or face major barriers to finding and retaining employment. As a result, many would end up uninsured or going without needed care. At the same time, such a work requirement would fail in its stated objective to increase long-term employment, just as similar requirements have failed to increase long-term employment in TANF. In fact, if the resulting loss of coverage led to a deterioration in health for some people, as it well could, a work requirement could make it harder for some of the affected low-income adults to become or remain employed.
Medicaid-eligible individuals who don’t work now or are not participating in other work activities would be barred from coverage, actually making it less likely they could obtain jobs in the future. While most adult Medicaid beneficiaries work, the work requirement would provide few exemptions for others. For example, the Manager’s Amendment would only exempt sole caretaker parents of young children (under age 6) or of children with disabilities, and those in school if they were under the age of 20. It wouldn’t, for example, exempt a young adult attending college, a married mother taking care of an infant, or an adult caring for an aging parent. Moreover, many of those subject to such a requirement may already have substantial barriers to work that could become worse without access to health coverage — such as opioid addiction or other health conditions that could worsen without treatment. For some of these individuals, access to health services could be the primary pathway to employment; if blocked from Medicaid coverage, they could find it much more difficult to find and hold a job. Ohio’s Department of Medicaid found that Medicaid can reduce health barriers to finding or holding a job for beneficiaries who are not working: three-quarters of beneficiaries who received care under the state’s Medicaid expansion and who were looking for work reported that Medicaid made it easier to do so. For those who were currently working, more than half said that Medicaid made it easier to keep their jobs. In addition, there is no requirement for states to provide any resources for job training or other employment services, subsidized jobs, child care assistance, and other work supports to help beneficiaries prepare for work or raise their earnings. Considering that states will experience large and growing cost shifts under the House bill, particularly with the provision to impose a per capita cap or a block grant, it would be highly unlikely that states would have significant new resources to offer necessary work supports. (States currently spend less than 10 percent of their TANF funds on work or work supports such as transportation assistance or work clothes.) As a result, the work requirement would end up being merely punitive for those who already have difficulty finding employment or staying employed.
The TANF experience further demonstrates that a work requirement in Medicaid would do little to increase long-term employment among poor families. Research shows that employment among TANF cash assistance recipients subject to work requirements rose significantly in the first two years of programs that mandated participation in work-related activities but, by the fifth year, the difference in employment rates between those who faced work requirements and those who didn’t had faded. Over five years, at least three-quarters of recipients worked, regardless of whether they faced work requirements. In addition, work requirements made some families worse off. The share of families living in deep poverty — below half of the poverty line — rose in various TANF programs that imposed work requirements, studies of TANF recipients show. Moreover, before the 1996 welfare law took effect, 68 every 100 poor families with children received basic cash assistance to help make ends meet; today, just 23 do. Sanctions on parents who didn’t meet a work requirement have been a factor in that drop. Work requirements would have other unintended consequences for those unable to work. Although the House health bill exempts people with disabilities, it will be administratively challenging to identify and track people whose disabilities or circumstances ought to exempt them. State TANF programs have failed notably on this front, with studies showing that TANF recipients who are sanctioned for not meeting a work requirement have significantly higher rates of disability than those who are not sanctioned. People with disabilities, family care responsibilities, or other significant problems or limitations often have difficulty proving they are unable to meet a work requirement.
In addition to likely being ineffective in increasing employment over time, a work requirement would add considerable complexity and cost to Medicaid. State experience in implementing the TANF work requirements suggests that adding similar requirements to Medicaid could cost states thousands of dollars per beneficiary. States would have to create new programs and hire new staff to track beneficiaries’ employment status and cut off their health coverage if they didn’t meet the requirements at the same time they are facing cuts in overall federal Medicaid funding. The small increase in federal funding for administrative costs would fall short of covering these added costs.
The work requirement would accelerate the end of the Medicaid expansion. As explained below, the Manager’s Amendment and the underlying House bill would effectively end the Medicaid expansion in the 31 states (and the District of Columbia) that have adopted it by substantially cutting the federal matching rate for new expansion enrollees and allowing states to freeze any new enrollment. Because most already enrolled individuals would quickly cycle off the program as their income changes, the expansion would end after several years. But if an expansion state took up the work requirement, which it could as early as this year, it would speed up this loss of coverage that would already occur under the House bill, eliminating the expansion even more rapidly.