New report warns against problematic Medicaid work requirements

For Immediate Release 
March 7, 2018

Contact:
Alex Rossman
arossman@milhs.org
517.487.5436

Analysis shows why Michigan Legislature should abandon pursuit of ineffective, expensive and potentially illegal policy

LANSING—After getting the green light from the federal government, 10 states are pursuing Medicaid work requirements and Michigan could be next. But a new report released by the Michigan League for Public Policy today, Medicaid work requirements: Why making people work doesn’t work, reveals that Michigan lawmakers should think twice before pursuing the costly and risky policy.

Enacted in 1965, Medicaid was created to give people with low incomes health insurance and to improve their health. Nowhere in the Medicaid statute does it say that work could and can be used as a determination of eligibility—a basis supported by every previous presidential administration in five decades since. But President Donald Trump and his federal Department of Health and Human Services (HHS) and the Centers on Medicare and Medicaid Services (CMS) directors have changed course.

Some Michigan legislators are looking to capitalize on the opportunity to pursue Medicaid work requirements, and a bill has already been introduced in the House of Representatives, HB 5317. This move could complicate and even eliminate life-saving healthcare for over two million Michiganders on Medicaid, including the 675,000-plus that are enrolled in the state’s Medicaid expansion program for residents with low incomes, the Healthy Michigan Plan.

“Michigan legislators must look at the human and financial costs of attempting to implement work requirements, especially with the growing data and information that shows they are likely to cause more harm than good,” said Gilda Z. Jacobs, president and CEO for the Michigan League for Public Policy. “Medicaid work requirements will likely come with a hefty price tag to both the state and federal government, and with major questions about legality, they are more likely to be settled with a gavel in a courtroom than a gavel in the Capitol.”

Most Medicaid enrollees in Michigan are already working. In a study by the University of Michigan of those enrolled in Michigan’s Medicaid expansion program, Healthy Michigan, 48.8 percent of respondents said they were employed. Additionally, 27.6 percent of enrollees were out of work, with many stating poor health status, chronic illness or mental illness as their reason for not having work. The rest of those surveyed who were not working stated they were unable to work due to fair or poor health (11.3%), or because they were retired (2.5%), students (5.2%) or homemakers (4.5%).

Other studies related to Medicaid employment nationwide show that 6 out of 10 nonelderly Medicaid enrollees are working and 8 out of 10 Medicaid enrollees live in a household where someone is working. Similar to the study done in Michigan, those who are not working state that disability, caregiving responsibilities or going to school are the reasons they are not.

“Too often we see politicians burdening Michiganders in need with harsh requirements and confusing red tape,” Jacobs said. “It would be more productive for Michigan lawmakers to invest in job training and continued support for Medicaid and other assistance programs, without which many Michiganders would lose access to valuable health coverage that allows them to work and provide for their families.

What’s wrong with Medicaid work requirements? A lot. Here are some of the primary concerns outlined in the report:

Exemptions will be hard to get. Narrow definitions and the difficulty of obtaining medical records and other documents will create additional problems for recipients, healthcare providers and Medicaid offices.

Lost healthcare coverage and burdensome bureaucracy for recipients. Complex paperwork for exemptions, coverage “lockouts” for noncompliance and additional requirements for employers add layers of complication to the program.

Legality. In Kentucky, a lawsuit has already been filed in response to the recent approval of the Kentucky Medicaid waiver to enforce work requirements (Stewart v. Azar).

High cost. Cost estimates for Medicaid work requirements in Kentucky are nearly $187 million for the first six months. In Tennessee, they are expected to cost $18.7 million a year. (Federal funding is expected to largely cover the cost.) The savings states are hoping to reap will largely come from people losing their coverage.

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Additional Resources:

Center on Budget and Policy Priorities: A Medicaid Work Requirement Would Block Poor Families from Care

Kaiser Family Foundation: Understanding the Intersection of Medicaid and Work

Health Affairs: Myths About the Medicaid Expansion and the ‘Able-Bodied’

New York Times: The Adults a Medicaid Work Requirement Would Leave Behind

The Michigan League for Public Policy, www.milhs.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.