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The Trump administration’s plan for Medicaid work requirements, explained

The move marks a dramatic change to the 50-year-old program.

President Donald Trump and CMS Administrator Seema Verma.
Mark Wilson/Getty Images
Dylan Scott covers health care for Vox. He has reported on health policy for more than 10 years, writing for Governing magazine, Talking Points Memo and STAT before joining Vox in 2017.

The Trump administration is paving the road for states to design new eligibility requirements for Medicaid, including forcing many recipients to work, look for work, or volunteer in order to qualify for government health coverage.

It’s a dramatic shift for the 50-year-old program. Under current law, eligibility for Medicaid is based almost entirely on income. But the Trump administration, after months of promises, is now telling states how they can introduce a new requirement that certain Medicaid recipients also work in order to receive health coverage through the program — a move that experts say is a significant departure from the program’s purpose of providing a safety net to Americans in or near poverty.

“Conditioning Medicaid eligibility and coverage on work is a fundamental change to the 50-plus-year history of the Medicaid program,” MaryBeth Musumeci, who studies Medicaid at the Kaiser Family Foundation, told me.

Right now, 10 states have proposals pending with the Trump administration to impose some kind of work or community engagement requirement, almost all of them led by Republican legislatures and governors. The first proposed waiver with a Medicaid work requirement, from Kentucky, was quickly approved by the administration on Friday.

The new guidance from the Centers for Medicare and Medicaid Services offers some parameters for these requirements. Certain populations — the elderly and pregnant women, for example — are expected to be exempt. States are expected to consider various activities, including volunteering and caregiving, to comply with these work requirements. They are also asked to account for high unemployment in some areas and to accommodate, in the midst of the opioid crisis, people in drug treatment.

But in spite of the administration’s nods to these various vulnerable populations, critics said the guidance released Thursday did not actually provide sturdy guardrails to protect them.

“It’s like the Wild West. Who knows what will come in the door?” Sara Rosenbaum, a George Washington University professor who has followed Medicaid policy for decades, said. “Everything is couched as ‘you could,’ ‘you might,’ ‘you should think about.’ It’s like winking and nodding throughout the whole thing. They are not saying, ‘These are the limits on what we’ll approve.’”

Republicans argue that requiring work for Medicaid eligibility will lead to better health outcomes, because employment can be linked to improved health and help move people off Medicaid as they make more money. But many Medicaid recipients are already working. If they are not, then they are likely elderly, disabled, retired, sick, or caring for a loved one. These new bureaucratic hurdles could impede some Americans’ ability to access health insurance and the care they need.

The Trump administration’s Medicaid work requirements, explained

Republicans have long criticized the Affordable Care Act for expanding Medicaid eligibility to non-disabled adults without children, a move that has covered more than 15 million Americans in or near poverty. Though Congress failed to repeal the expansion, CMS Administrator Seema Verma has pledged to use her administrative authority to rein the program back in.

Requiring work for non-disabled adults, particularly the expansion population, is central to the Trump administration’s vision of reshaping the Medicaid program as long as Congress is unable to act.

“This policy is about helping people achieve the American dream,” Verma told reporters on Thursday. “People moving off of Medicaid is a good outcome because we hope that means they don’t need the program anymore.”

States and the federal government jointly fund Medicaid, but states are responsible for running it. Work requirements cannot be imposed at a national level without congressional action, but states can propose a work requirement in a waiver, and the Trump administration can approve it.

Most fundamentally, CMS urged states to target any work requirements for non-disabled working adults; pregnant women, the disabled, and the medically frail are expected to be exempt. However, experts questioned how ironclad that guardrail is, given that parts of the guidance released Thursday appear to only suggest, not mandate, that those populations should be excluded from any work requirements.

“There is a breathtaking lack of guardrails. Basically almost anything goes,” Rosenbaum said. “There’s really nobody who’s exempt.”

The Trump administration says that states should try to align any Medicaid work requirements with existing mandates for federal food stamps and cash welfare programs, which generally require 20 to 30 hours of work or related activity every week. Those programs also exempt pregnant women and the disabled.

States are advised to consider a range of activities to fulfill the work requirements, including actual employment, job training, volunteering, or caregiving. CMS officials said states would have broad authority to decide what will actually be considered in compliance with their work requirements.

The agency singled out the need to continue providing Medicaid coverage for people with opioid addictions, in the midst of a crisis killing 60,000 Americans every year, and urged states to consider drug treatment to be counted toward a work requirement.

However, several experts noted that CMS will not be providing federal resources for states to administer their work requirements. The administration may be constrained by federal law, which requires Medicaid dollars to pay for actual health care, but the result nevertheless is that states could struggle to effectively implement their work requirements and any bureaucratic snafus could result in people who need and should qualify for Medicaid coverage losing it.

“For a state to do this, it would take enormous resources, and they’re not going to put those in,” Judy Solomon, who follows Medicaid at the left-leaning Center on Budget and Policy Priorities, told me. “We know enough to know this can’t be implemented in a way that protects people. At the end of the day, it’s going to have people who need health care lose coverage.”

Rosenbaum also warned about “the potential for enormous discrimination, really racial redlining.” She noted that CMS would allow states to account for local conditions, such as high unemployment in certain areas or other factors, to provide exemptions from a work requirement.

Rural areas, more likely to be white, could have fewer job opportunities, less robust transportation, and fewer social support services, all things that might lead a state to provide an exemption from the work requirement. The result, intentional or not, is that black people on Medicaid — because they are more likely to live in urban areas, where those grounds for exemption are less likely to be found — could face a higher burden under these waivers.

“All of these things are potentially much harder to come by in rural areas,” Rosenbaum said. “Because of the demographics, you could have situations where the populations required to work are disproportionately African-American.”

Most Medicaid recipients already work or have good reason not to

There is strong evidence that there is not a vast number of Medicaid enrollees who are avoiding work to stay on the program’s rolls.

Research conducted by the University of Michigan and published last month in JAMA looks at the work status of people who enrolled in Medicaid after Michigan expanded the program under Obamacare. It stands out from other research because it’s based on interviews with enrollees, rather than on administrative data or other information.

The big-picture takeaway is: Most Medicaid enrollees in Michigan were working already, unable to work, or at a point in their lives where they would not work (retired or a student). Almost three-fourths of the people in the study fell into those categories.

Nearly half of the Michigan Medicaid enrollees were working. Another quarter were either unable to work or were retired, in school, or acting as a homemaker. State proposals to institute such a mandate usually make allowances for the Medicaid enrollees who are in school or have a disability that stops them from working.

Only 27.6 percent were “out of work” — not working but would work. Those are the people who might be affected by a work requirement.

Even within the “out of work” population, based on the Michigan survey, are people with real barriers to working — and who might benefit from having health insurance:

  • Two-thirds said they had a chronic physical illness.
  • 35 percent said they had been diagnosed with a mental illness.
  • One-quarter said they had a physical or mental condition that interfered with their ability to function at least half of the time.

“The question raised by these data for states is — is it worth the cost to screen and track enrollees when only a small minority isn’t working who are potentially able to work,” Dr. Renuka Tipirneni, lead author of the Michigan study, said in a statement.

The findings in Michigan align with broader national surveys. The Kaiser Family Foundation found in 2015 that most Medicaid enrollees who might be expected to work were ill or disabled, retired, going to school, or taking care of their family.

Kaiser Family Foundation

Not only do most Medicaid recipients who might be affected already work, but the new requirements could place an administrative burden on those people that could cause them to lose coverage, even if they are actually in compliance with the requirements.

“Documenting compliance will often not be trivial, and even small hassle costs can discourage people from signing up for insurance coverage,” Matt Fiedler, who covers health care policy for the Brookings Institution, told me. “Higher hassle costs will likely cause meaningful reductions in Medicaid coverage even among people who are working.”

Medicaid work requirements could soon be approved — and challenged

CMS said that 10 states had submitted waivers requiring work or community engagement as a condition for Medicaid recipients. Some states, like Wisconsin and Kentucky, have proposed more robust changes, including drug-testing enrollees and requiring them to pay more out of pocket for their health care.

The Washington Post reported, citing sources familiar with the process, that the first work requirement could be approved as soon as Friday, probably for Kentucky. Others could soon follow.

But any approved waivers are expected to be swiftly met with legal challenges. The issue hinges on whether requiring work for Medicaid can be construed as furthering the goals of the Medicaid program, which contains no explicit reference to encouraging work. As the Post explained:

“This is going to go to court the minute the first approval comes out,” predicted Matt Salo, executive director of the National Association of State Medicaid Directors, whose members reflect a spectrum of views about requiring work. The association

Once CMS gives one state permission, “we would be looking very, very closely to the legal options,” said Leonardo Cuello, health policy director at the National Health Law Program. “It’s not a good idea, and it’s illegal.”

Cuello said the argument that work promotes health is “totally contorted. . . . It’s a little like saying that rain causes clouds. It’s more that people [with Medicaid] get care, which helps them be healthy and makes them able to work.”

In the call with reporters on Thursday, Verma defended work requirements as in compliance with the goals of the Medicaid program, asserting that CMS considered the proposals to be well within the administration’s discretion to approve.

“As we know, there’s countless studies out there that show the link between having a job and positive health outcomes,” she said.

Any legal challenge will focus on the particulars of a state’s proposal and the administration’s explanation for approving the waiver, Nicholas Bagley, a health law professor at the University of Michigan, told me.

“The real devil will be in the details; it will be in the details of the plans that are submitted and in particular in the details of what CMS says in approving the waivers,” he said. “It’s a pretty flexible standard, and the courts are in general disinclined to second-guess an agency’s determination that a particular waiver will advance the program’s objectives or it’s a genuine test.”

So the matter is not yet resolved. But the Trump administration has opened a major new front in the battle over Medicaid.

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