Medicaid Work Requirements Hit Roadblocks

This article was originally published by Stateline, an initiative of The Pew Charitable Trusts.

Toward the end of 2018, the Trump administration seemed to be marching briskly toward its goal of requiring able-bodied adults in Medicaid to prove they had jobs to participate in the public health plan for the poor.

But while a number of states still are adopting work requirements, the path has gotten murkier in recent months, both because of court rulings and political calculations.

In three red states that might have been expected to adopt work requirements, lawmakers failed this year to pass legislation. Some governor seats recently occupied by Republicans changed hands as 2019 opened, bringing in executives who oppose work requirements.

And a federal judge in Washington, D.C., last month ruled that Trump’s Department of Health and Human Services had improperly approved work requirements in Arkansas and Kentucky. The same judge is considering a similar challenge to HHS’ approval of New Hampshire’s plan to impose work requirements in its Medicaid program.

While the rulings, which the administration is appealing, do not prohibit work requirements in other states, state legislators in at least two states took notice, and adopted narrowing provisions they hope will enable their Medicaid work requirements to survive judicial review in the face of expected legal challenges.

“It’s not surprising that a state would not want to spend a lot of money setting up a program that may be struck down by a court,” said Leonardo Cuello, director of national health policy at the National Health Law Program, which brought the lawsuit against the work requirements in Arkansas and Kentucky. “You would think any rational state would not engage in this type of legislation at this point.”

Legislation on Medicaid work requirements died in West Virginia and Wyoming in February and in Iowa in March at virtually the same time a U.S. district judge in Washington, D.C., ruled that work requirements in Medicaid in Kentucky and Arkansas were illegal.

To be sure, other states whose work requirement plans have been approved by HHS are moving ahead, including Arizona, Michigan, Ohio and Utah. Not including the two states affected by the court ruling, HHS has approved Medicaid work requirements in seven states and is considering applications from six others.

“Nobody’s panicking,” Rea Hederman, vice president of policy at the Buckeye Institute, an Ohio-based free-market think tank that favors work requirements, said about the court rulings. “It’s a lot of business as usual, but there are more yellow lights flashing now.”

‘We Backed Off a Little Bit’

While federal public assistance programs relating to nutrition, housing and cash assistance have imposed work requirements since the mid-1990s, policymakers didn’t move to impose them as a condition for medical assistance.

Conservatives began clamoring for a work requirement in Medicaid as well after the Affordable Care Act expanded eligibility to childless adults in 2014.

Two years ago, then-HHS Secretary Tom Price and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, alerted governors of the Trump administration’s welcome of work requirements.

States must seek permission from the federal government for certain changes in their programs, such as the imposition of work requirements. In some states, governors can apply for those changes; in others, the state legislatures must sign off as well.

In Arkansas, which was the first state to impose Medicaid work requirements last July, the state disenrolled more than18,000 residents by December for failing to meet the requirement or submit proper documentation. (The state hasn’t updated the numbers since then.)

Starting in March 2018, the Trump administration began handing out permission for work requirements to any state that applied, lending a sense of nationwide momentum to the policy change. But as 2019 legislative sessions unfolded, bills on Medicaid work requirements faltered in several conservative states where they might have been expected to pass.

“Even before the court rulings, we saw some states showing a new reluctance to pursue work requirements,” said Joan Alker, executive director and co-founder of Georgetown University’s Center for Children and Families.

While not philosophically opposed to work requirements, she told the Gazette newspaper of Cedar Rapids, “It’s just that we want to do it mindfully where we are not hurting people that certainly do need the assistance (and) we are appropriately catching the people that are taking advantage of the system.”

(Lundgren did not respond to a request for comment from Stateline.)

Lisa Heddens, the ranking Democrat on the committee, said in an interview with Statelineshe thought Republicans also were concerned about the estimates from the legislative financial analysts. They estimated it would cost $5 million in the first year of operation and $12 million in the second for the state to set up a system to verify that beneficiaries are meeting the requirements.

Those are funds, she said, the state could ill afford to waste if a court ultimately threw out the state’s work requirements. “That’s not something you want to do with a tight budget,” she said.

In West Virginia, Democratic state Del. Larry Rowe, an outspoken opponent of work requirements, said he thinks Republicans feared work requirements would be politically unpopular. He noted that West Virginia is the state with the highest share — 29% — of residents on Medicaid, according to the Kaiser Family Foundation. “If you take away people’s health care, they’re going to be looking for someone to blame.”

Rowe also pointed out that the state’s hospitals were adamantly opposed to work requirements. “You want to take on the biggest employer there is in many of these rural counties?” he said.

Republican legislative leaders in West Virginia did not return calls from Stateline.

Some state legislatures that have passed work requirement measures this year have tweaked them in the wake of the March ruling by U.S. District Judge James Boasberg in Washington, D.C., throwing out work requirements for Arkansas and Kentucky.

Boasberg said the requirements conflicted with the objective of Medicaid, which is in the federal law that created the program: to furnish medical assistance to the poor.

The Idaho legislature passed a Medicaid expansion law this month with a work requirement. (State voters approved Medicaid expansion in a ballot initiative in November.) But the Republican sponsor of the bill, state Rep. John Vander Woude, said in an interview that the legislature, taking note of the court rulings regarding Arkansas and Kentucky, added a last-minute provision.

If work requirements do not ultimately pass judicial review, instead of throwing nonworking beneficiaries off Medicaid, Idaho would impose copayments on them.

“We backed off a little bit in light of that judge’s decision,” Vander Woude said.

Earlier this month, Montana became the latest state to expand its Medicaid program to childless adults in keeping with provisions of the Affordable Care Act. Democrat Jon Sesso, the Senate minority leader, said in order to pass the bill, Republicans insisted that it include a work requirement.

But, he said, Democrats were able to add exemptions for certain beneficiaries, such as pregnant women and the chronically homeless, and to lessen bureaucratic burdens on enrollees to reduce the chances they would be dropped. “Hopefully, we’ve limited the number of people who would be thrown off,” Sesso said.

Republicans also agreed to a provision ensuring that if a court throws out work requirements in Montana, the Medicaid expansion would remain in place. It also included a provision that could result in a suspension of the work requirements if more than 5% of beneficiaries are dropped from the rolls.

Democrats Take Governorships

November’s elections also had an impact on work requirements. Immediately after taking office as Maine’s new Democratic governor in January, Janet Mills withdrew the state’s application from HHS for approval of work requirements.

Wisconsin and Michigan also saw their governor seats switch from Republicans who had sought and received permission to impose work requirements to Democrats, who are likely to pressure their state legislatures to drop the requirements or modify them.

In Wisconsin, Democratic Gov. Tony Evers has indicated that he opposes work requirements. But during the lame-duck session last fall, Republicans passed a measure requiring legislative approval to lift the work requirements.

As a result, Jim Jones, head of the state’s Medicaid agency, said in an interview with Stateline, “Wisconsin is stuck with work requirements.” He said the requirements will cost the state about $120 million in administrative and employment support services over the next two years.

While Michigan’s new Democratic Gov. Gretchen Whitmer says she is concerned that the state’s work requirement could result in as many as 183,000 people losing Medicaid coverage for a year’s time, she stopped short of saying she would seek its repeal. Instead, she indicated she would seek unspecified changes to minimize unwarranted losses of coverage.