States OK’d to Test Impacts of Work Requirements for Medicaid Beneficiaries

The Trump administration announced Thursday that it would allow states to test the impact of work requirements as a condition to enrollment in Medicaid, the federal-state program that provides health care coverage to millions of low-income Americans.

The announcement came in the form of a 10-page letter from the federal Centers for Medicare and Medicaid Services addressed to state Medicaid directors, which offered guidance on implementing such demonstration projects, as these types of Medicaid waivers are called.

The memo details the populations that states should consider excluding from the “work and community engagement” mandates—the pregnant, the elderly, those with children, the disabled, etc.—and which activities states may consider equivalent to traditional employment—volunteer positions, job training, job seeking and care for non-dependent relatives, to name a few.

“Our fundamental goal is to make a positive and lasting difference in the health and wellness of our beneficiaries, and today’s announcement is a step in that direction,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, said on a call with reporters.

Verma also acknowledged on the call that implementing such requirements would likely lead to a decrease in Medicaid enrollment, a development she painted as a positive, rather than a detraction.  

“We see moving people off Medicaid as a good outcome because that means they do not need the program anymore and have transitioned to a job or can afford insurance,” Verma said. “This policy helps people achieve the American dream.”

CMS has not released figures on exactly how much the measure would decrease the program’s rolls across the country.

According to Verma, CMS is in the process of evaluating waivers that include work mandates from 10 states—Arizona, Arkansas, Indiana, Kansas, Kentucky, New Hampshire, North Carolina, Maine, Utah and Wisconsin. South Dakota officials have signaled their intent to join that growing list.

Experts have speculated that Kentucky is likely to be the first state to see its work requirement waiver approved. In response to the guidance from the Trump administration, the state’s Medicaid Commissioner Stephen Miller tied Thursday’s memo from CMS to the future of the Kentucky’s 1115 waiver—known as Helping to Engage and Achieve Long Term Health, or Kentucky HEALTH—which was submitted by Republican Gov. Matt Bevin 16 months ago.

“We are excited about the new guidance issued by CMS to allow states the flexibility to pursue innovative approaches to improve the health and well-being of Medicaid beneficiaries,” Miller said, in an emailed statement. “This guidance is a critical step to moving the Kentucky HEALTH program forward and we eagerly anticipate a quick approval of our 1115 waiver.”

In the past, administrations have rejected any move by states that made work a condition for enrollment in Medicaid, citing the parameters of such waivers laid out by Section 1115 of the Social Security Act. Under that law, a state can implement an “experimental, pilot or demonstration project which, in the judgment of the Secretary [of Health and Human Services], is likely to assist in promoting the objectives of [Medicaid] in a state or states.” Federal officials in previous administrations have argued that employment is not one of the “objectives” of the program.

For that reason, the memo from CMS explicitly posits the notion that state efforts which push Medicaid enrollees to engage in work will result in favorable health outcomes for those beneficiaries. One section of the CMS letter titled “Health Benefits of Community Engagement, Including Work and Work Promotion” cites research that, the memo’s authors claim, shows the connection between employment and health:

One comprehensive review of existing studies found strong evidence that unemployment is generally harmful to health, including higher mortality; poorer general health; poorer mental health; and higher medical consultation and hospital admission rates. Another academic analysis found strong evidence for a protective effect of employment on depression and general mental health. A 2013 Gallup poll found that unemployed Americans are more than twice as likely as those with full-time jobs to say they currently have or are being treated for depression.7 Other community engagement activities such as volunteering are also associated with improved health outcomes, and it can lead to paid employment.

The memo does not, however, acknowledge the possibility that causality may instead run in the opposite direction—that good health may be an enabler of steady employment. If that is, in fact, the case, work mandates would be counterproductive to the goal of poverty reduction. In short, barring people from accessing health care may keep them from being healthy enough to get and maintain a job.

The fight against these proposed Medicaid changes will almost certainly include lawsuits. And the legal case against work requirements may well rest upon CMS’ ability to prove that a work requirement will lead to improved health.