A dozen states are applying for or entertaining work requirements and other restrictions on Medicaid — putting the lifeline for millions of poor Americans at risk.
The story of Medicaid so far has been of gradual expansion, from the absolutely most vulnerable Americans to a broader social safety net for all Americans in or near poverty.
But now, under Trump, the Centers for Medicare and Medicaid Services have signaled that they are open to unprecedented policy changes, most notably requirements that many Medicaid beneficiaries either work or look for work. The Trump administration could initiate the most dramatic reductions in Medicaid enrollment and spending since the program began, even though Trump as a presidential candidate promised he would not cut Medicaid.
The precise consequences are difficult to project. But states seeking waivers for work requirements and other restrictions are estimating as much as an 8 percent or 15 percent cut to their Medicaid rolls. Not every Medicaid recipient, not even most, will be subjected to some of these harsher rules. But there is a sizable population who could soon face a real risk of losing health coverage.
Embedded in this war over the 52-year-old program, a product of President Lyndon B. Johnson’s Great Society, is a question about the role of Medicaid. Is it something you are entitled to if you meet certain requirements? Or is it more like welfare, or Temporary Assistance for Needy Families, has become: a short-term boost until enrollees can get back to work.
Right now, Medicaid is as big as it’s ever been: 75 million Americans get coverage under the program. The Republican Congress tried and failed, as part of its Obamacare repeal crusade and with Trump’s endorsement, to undo the Affordable Care Act’s historic expansion of Medicaid and to fundamentally overhaul its financing with a federal spending caps. But the Trump administration can still dramatically change the program through administrative action.
Under President Barack Obama, Medicaid very nearly became a universal health care program for America’s poor. That guarantee is becoming more tenuous.
“In real life, what I think is most concerning is it will lead to losses of coverage, and that is not what the Medicaid program is supposed to be doing,” Cindy Mann, who oversaw Medicaid under President Obama, told me. “It’s supposed to be promoting coverage and promoting affordable coverage.”
The Trump administration is working hard to undo much of that progress and turn Medicaid into something the nation’s most disadvantaged people must earn.
Now that Republicans are in charge, they’re chipping away at Obamacare’s Medicaid expansion
At least five of the most conservative states that nonetheless expanded Medicaid under Obamacare — Kentucky, Indiana, Arkansas, Arizona, and New Hampshire — have asked the Trump administration to let them establish work requirements and set other restrictions for many of their Medicaid recipients.
Much of Medicaid should be safe, or safer, from the Trump administration’s meddling. About 50 million of the program’s 75 million enrollees are children, elderly, disabled, or pregnant. Those populations are usually exempt from work requirements and these other restrictions, like time limits, and states are required to cover them under federal law.
But that still leaves about 25 million non-disabled, non-elderly adults who could potentially be subject to work requirements and other eligibility conditions, according to the Kaiser Family Foundation’s estimates. That figure is a starting point for understanding how much the Trump administration could pare back the Medicaid rolls.
The most vulnerable populations are likely to be the childless adults covered by Obamacare’s Medicaid expansion. “There are a lot more childless adults,” Mark McClellan, who led CMS under President George W. Bush, told me. “You have people who think the program should evolve.”
Those five Medicaid expansion states could soon have work requirements. Several other states that have resisted Medicaid expansion so far, like Virginia, are now entertaining it but only on the condition that they have a work requirement, which would likely limit the actual coverage gains made by expanding Medicaid.
Work requirements, in other words, could become a tool by which states can partially roll back Medicaid expansion or implement a neutered version of it. The same could be said of waiver provisions that would lock people out of Medicaid coverage for failing to pay a premium and that put a time limit on how long people can be eligible for Medicaid.
It is a remarkable reversal, Medicaid experts say, from the way waivers have been used in the past to expand health coverage.
“We’re just talking about ways to cut coverage,” Joan Alker, executive director of Georgetown University’s Center for Children and Families, told me. “Under any previous administration, waivers have not been used to devise ways to cut coverage.”
The case of Kentucky should make the objective clear. The Bluegrass State expanded Medicaid under Democratic Gov. Steve Beshear in 2014; it’s covered 350,000 newly eligible residents and saw its uninsured rate drop to a historic low.
But then in 2015, Republican Matt Bevin was elected to succeed Beshear. He sought to impose a work requirement and he has found a willing partner in the Trump administration. This was, in his view, a logical step after Medicaid had been expanded to cover these new populations.
“This requirement is for those that Medicaid was not originally designed for,” Bevin said in January to justify his proposal.
The net effect, though, is a dramatic drop in enrollment, according to the state’s own projections. Five years after the work requirement is put into effect, Kentucky Medicaid enrollment will have shrunk by nearly 100,000 people, or 15 percent. Bevin claims that this is because people will find work and make more money, getting insurance through their employer or moving into private coverage.
Most adults on Medicaid already work — about 60 percent, according to the Kaiser Family Foundation’s estimates — and those that don’t are often in school, or caring for a loved one, or they might have a physical or mental illness that makes it difficult to work, even if they are not technically disabled.
Health policy experts expect that bureaucracy will actually be responsible for much of the enrollment cuts. People who do qualify for coverage and either meet or are exempt from work requirements could fall off the rolls if they don’t file their paperwork or encounter an administrative mishap.
“The people who policymakers and the public would want to protect, with medical conditions, barriers to employment, they’re going to be exempt. But the system isn’t geared to get these people out of harm’s way,” Mann said. “It’s the people who are least able to gather the paperwork required that will get caught in the cracks and will lose their coverage.”
Not to mention that parents losing coverage can adversely affect their children: Their families would be more at risk of medical bankruptcy, sicker parents are worse parents, and kids will be more likely to fall off the rolls themselves if their parents have lost health coverage.
Red states that didn’t expand Medicaid still want to restrict coverage
In addition, at least five states that didn’t expand Medicaid have nonetheless proposed work requirements and other restrictions, like premiums and time limits, on parents and other adults on Medicaid.
Mississippi is the poster child for this new kind of waiver. That state’s proposed work requirement, according to Alker, targets only parents and caretakers whose income is 27 percent of the poverty line or less. They make $3,250 or less in an entire year.
These people are truly impoverished and are much closer to the historical Medicaid population than the people covered by Obamacare. And yet here, a state like Mississippi — or Utah, or Kansas — wants to require them to work or look for work or risk losing their health coverage.
Mississippi is projecting about 20,000 people will fall off its Medicaid rolls over five years, according to Alker. It is virtually assured almost all of them would become uninsured; they do not have the money to pay for private health coverage.
This seems new to people who know the program well, and it means lots of Medicaid dollars will be spent on the administrative work necessary to make these requirements work instead of on health care or other improvements.
“I can’t think of any waiver that has been granted that actually constrained the eligibility of a mandatory group,” Mann said. “By making these kinds of changes to Medicaid, we’re trading investments in better care for more ideological ambitions.”
There might be a bigger game afoot here, Medicaid advocates fear, one that is even bigger than unwinding Medicaid expansion or adding work requirements for some of the longer-standing Medicaid populations. They worry that Republicans are trying to use these new restrictions, particularly the work requirements, to stigmatize Medicaid as a program.
Conservatives confronted an uncomfortable reality during the Obamacare repeal debate: Medicaid, particularly the ACA expansion, had become quite popular. Too popular to roll back, as it turned out, with several GOP senators balking at undoing the expansion and at putting a federal spending cap on the program.
But conservative purists haven’t let go of those dreams yet. House Speaker Paul Ryan is still talking about codifying Medicaid work requirements into federal law, applying them to all states. Spending caps could be introduced again in a future Congress.
“From a larger perspective, I think this is very concerted effort to stigmatize Medicaid and to set up for the next round of block grants or per capita caps. That’s the holy grail,” Alker said. “To reinforce inaccurate notions of who is on Medicaid, to reinforce stereotypes that it’s lazy people who are not working, even though we know that’s not true.”
Medicaid escaped welfare reform in the 1990s. But if Republicans had their way, it wouldn’t be spared in the next round. The stakes are huge: Work requirements for food stamps have been linked to substantial drops — up to 50 percent in some isolated cases — in the program’s enrollment. As many as 25 million people population that could be subject to Medicaid work requirements if they were instituted nationwide.
In a very real sense, health coverage for millions of Americans who rely on Medicaid could be at risk under the agenda Trump is advancing.
Medicaid’s history is one of covering more and more poor Americans
Trump’s overhaul of Medicaid rests on a fundamental question: What kind of program is Medicaid going to be?
For decades, Medicaid has been a program that millions of vulnerable Americans — children, the elderly, people with disabilities, pregnant women — were entitled to. If you fell into one of those categories, and your income was low enough, you qualified for benefits.
Medicaid expanded over the years, covering more populations — parents, some impoverished childless adults — and health care services. Obamacare was, from a progressive perspective, the natural end to that evolution: Anybody with an income in or near poverty ($27,000 and below for a family of three) would be eligible for Medicaid.
The US Supreme Court prevented a perfect realization of that vision, giving states the choice to opt out of the ACA’s Medicaid expansion. But the course was set. To entice some Republican-led states to accept the ACA expansion, the Obama administration even permitted some policies like charging nominal premiums for childless adults.
But they forbade states from kicking people in poverty off of Medicaid for failing to comply. It went back to this fundamental understanding of what Medicaid is about: giving people health insurance. Work requirements, in particular, were off the table for Obama for that reason.
“It’s a health insurance program and not one that’s aimed at supporting or requiring people to be engaged in work activities,” Mann told me. “It’s about medical assistance. It’s about insurance.”
In the end, Medicaid was expanded in more than 30 states under Obama and covered 15 million more Americans than it had before the ACA.
The conservative case against the Medicaid expansion
But conservatives tell a very different story. In their telling, Medicaid has ballooned far below its original mission in 1965 of covering a certain set of health care services for only the most vulnerable Americans. Obamacare’s Medicaid expansion was simply the latest offender, bringing adults without children — who Republicans think we should be trying to move up in the workforce, not tethering to the safety net — fully into the program.
Republicans who oversaw Medicaid in the past are receptive to the idea that some of these standards for Medicaid eligibility should be reevaluated now that new populations, like the childless adults covered by Obamacare, are being brought into the program.
“Now that we’re covering different populations, expanding the program, maybe there are some new considerations that should come in, like whether or not people choose to work,” McClellan told me. “People are questioning whether its benefits structure and requirements that worked pretty well before are best designed for this new population. I do think that’s a reasonable discussion to have.”
These Republican arguments had success in the past when it came to welfare. As Vox’s Dylan Matthews explained in his epic piece on the effects of welfare reform in the 1990s, the changes to work requirements almost certainly increased deep poverty for Americans living in the United States:
When you look at overall poverty from 1993 to 2012 (again, measured accurately rather than through the official measure), you see that it fell substantially in the 1990s and then stayed down.
That was true even in economic downturns. In 1993, as the nation recovered from the early ‘90s recession, the poverty rate was nearly 21 percent. In 2012, in the wake of the worst recession in post-WWII history, it spiked up to 16 percent, a huge improvement.
The same can’t be said of deep poverty. That fell in the ‘90s too — but by a comparatively tiny amount. And by 2012, it was back fairly close to its 1993 level.
Tellingly, the deep poverty rate in 1996, when welfare reform passed, was 4.6 percent. Since the end of the late-’90s boom in 2001, the rate has never been that low again.
If you try to isolate the effects of welfare reform, it appears that if anything it probably increased deep poverty in the US. The most disturbing evidence in this regard comes courtesy of the University of Michigan’s Luke Shaefer and Johns Hopkins’s Kathryn Edin, who have documented an increase in the share of Americans living on $2 a day or less in cash income.
The Trump administration officials clearly don’t see the problem with putting work requirements on the program. And they have specifically cited Medicaid expansion in justifying proposals to require work, charge premiums, limit the length of benefits, and all the other provisions Republican-led states are pursuing.
“This policy is about helping people achieve the American dream,” CMS administrator Seema Verma told reporters recently. “People moving off of Medicaid is a good outcome because we hope that means they don’t need the program anymore.”
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