March 2017 | Issue Brief Medicaid and Work Requirements MaryBeth Musumeci Recently, policymakers have been discussing whether work requirements should have a place in the Medicaid program. In the last three years, some states have proposed mandatory or voluntary work programs as part of their Section 1115 Medicaid expansion waiver applications. To date, the Centers for Medicare and Medicaid Services (CMS) has not approved any state’s request to require that Medicaid beneficiaries work as a condition of eligibility, on the basis that such a provision would not further the program’s purposes of promoting health coverage and access. Some states have created voluntary job training and referral programs for Medicaid adults, but CMS has noted that these are state-run programs separate from the approved expansion waivers. On March 14, 2017, CMS signaled a change in this policy in a letter to state governors indicating that it will use Section 1115 authority to approve provisions related to “training, employment, and independence.” Additionally, on March 20, 2017, the House released a manager’s amendment proposing policy changes to the American Health Care Act (AHCA), including a state option to condition Medicaid eligibility for nondisabled, nonelderly, nonpregnant adults upon satisfaction of a work requirement (see Table 1). In general, work is an important societal goal, and Medicaid can play a key role in ensuring that people who are able to work have the necessary supports, such as health coverage, to do so. However, conditioning eligibility for health coverage on satisfying a work requirement, and terminating health coverage for those who are unable to comply, could penalize the people who most need these supports. Such policies, whether administratively through waivers or through legislation, would be a fundamental change to the Medicaid program. This issue brief reviews the current status of states’ Section 1115 waiver requests relating to Medicaid work requirements (see Table 2) and identifies key policy questions to consider in terms of the impact on beneficiaries, states, and other stakeholders. State Waiver Requests Related to Work As of March, 2017, four states (AZ, IN, KY, & PA) had formally submitted waiver requests that would have required work as a condition of eligibility, none of which have been approved to date. Arizona, Kentucky, and Pennsylvania’s requests would have required a certain number of hours of work, typically 20, or another approved activity, such as job search or job training, per week, while Indiana only would have required a referral to a work search program. Kentucky’s application is still pending with CMS, and Arizona is in the process of submitting its request for a second time as required by state law. Under the prior Administration, CMS did not approve Arizona’s original request or the requests by Indiana or Pennsylvania. Indiana’s waiver renewal, now pending with CMS, does not seek a work requirement. Recently, Arkansas announced that it would seek changes to its waiver, including a work requirement, but it has not yet submitted a proposal. Three states (IN, MT, & NH) have a voluntary work program referral separate from their Medicaid expansion waivers. These states refer Medicaid adults covered under their waivers to voluntary state-funded work search and job training programs. Pennsylvania was going to pursue such a program under a former governor but ultimately did not. Ohio’s Medicaid expansion waiver, which was denied in its entirety by CMS, also proposed such a referral, as did a Medicaid expansion proposal by Utah, which was never submitted to CMS. Key Policy Questions Related to Medicaid and Work 1. WHAT ARE THE POLICY ARGUMENTS RELATED TO WORK REQUIREMENTS? Policy arguments for and against work requirements are grounded in views about whether Medicaid is akin to a cash welfare program or one that provides health insurance. Over the last several decades, changes in federal law can be seen as focusing the program on providing health coverage. For example, Medicaid eligibility is no longer linked to the receipt of cash assistance as it was under the former AFDC program, which was replaced by TANF. More recently, the Affordable Care Act’s (ACA) Medicaid expansion sought to expand health coverage regardless of whether a person with low income fits into a certain category of people, such as pregnant women, parents, seniors, or people with disabilities. By contrast, the House manager’s amendment to the AHCA would allow states to require certain Medicaid adults to participate in the list of work activities approved under TANF. Unlike Medicaid, one of the express purposes of TANF is to “end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage.” Incorporating the TANF work activity provisions into Medicaid appears to revert to treating it as a cash welfare program instead of one focused on providing health insurance. Some policymakers opposed to the ACA suggest that expansion of the Medicaid program to “able-bodied” adults disincentivizes work. Other conservatives contend that work requirements are ineffective in health coverage programs like Medicaid and could increase program costs if individuals are denied coverage for failure to comply and then seek emergency room care when they are sick. Research about the effectiveness of TANF work requirements suggests a “tradeoff between tough work requirements and an increase in disconnected mothers who are highly likely to be in poverty. . . especially during recessions.” People may be better able to fulfill work requirements when the economy is strong, but these effects may not be sustained over the long-term. States that have sought Medicaid work requirements typically have presented them in the context of policies that require Medicaid adults to have “skin in the game” by requiring them to comply with certain program rules to receive coverage. Other policies in this vein that have been approved by CMS include premiums and healthy behavior incentive programs. Some work requirement proponents also contend that work can improve health outcomes. Those opposed to Medicaid work requirements contend that good health is a pre-condition to work, citing people who have encountered barriers to work as a result of dental needs, chronic pain or other symptoms from untreated medical conditions and chronic illnesses. These policymakers argue that work requirements would prevent people from accessing the coverage and care needed to improve their health to the point where they can work. Medicaid and Work Requirements 2 2. HOW MANY MEDICAID ADULTS ALREADY ARE WORKING WITHOUT A PROGRAM REQUIREMENT? Nearly 8 in 10 Medicaid adults are in working families, and most (59%) are working themselves without being required to do so as a condition of coverage. Medicaid adults work in low-wage jobs, and most work in industries with low offer rates for employer-sponsored insurance, such as agriculture and food service. Even when excluding SSI beneficiaries, most Medicaid adults who are not working report a major impediment in their ability to work, with 35% citing an illness or disability that prevents them from work. Others are taking care of home or family (28%), in school (18%), looking for work (8%), or retired (8%). Additionally, an analysis of Ohio’s Medicaid expansion found that most expansion enrollees who were unemployed but looking for work reported that Medicaid enrollment made it easier to seek employment. Over half of expansion enrollees who were employed reported that Medicaid enrollment made it easier to continue working. Given these data and findings, Medicaid work requirements would have a narrow reach and could negatively affect those who are not working due to disability or caregiving responsibilities if they are not exempted from the requirement. 3. WHAT EFFECT WOULD ADMINISTERING A WORK REQUIREMENT HAVE ON STATES? A Medicaid work requirement could increase administrative burdens on states. States would have to track the number of hours that each beneficiary spends completing approved activities each month to determine compliance. States’ work requirement waiver proposals all include an exemptions process for certain populations, such as people who are medically frail, family caregivers, students, or victims of domestic violence. The pending House manager’s amendment to the AHCA would exempt certain limited populations and increases states’ federal Medicaid matching funds by 5% for state activities approved by the Secretary to implement the work requirement. These policies recognize that everyone is not able to work but also would require time and resources to implement and administer. Conclusion If the AHCA, including the manager’s amendment authorizing Medicaid work requirements, is passed by Congress, whether and how work requirements are adopted and implemented will vary by state. If the legislation is not enacted, the Administration still might approve Medicaid work requirements in states’ Section 1115 waiver applications. Under federal law, the Health and Human Services Secretary’s Section 1115 waiver authority is limited to approving demonstrations that, in the Secretary’s judgment, are “likely to assist in promoting the objectives” of the Medicaid program. Under the prior Administration, CMS concluded that work requirements were not related to Medicaid’s objectives of increasing access to coverage and care, while the new Administration has signaled that it may reach the opposite conclusion. Conditioning Medicaid eligibility on meeting a work requirement likely would apply to a small number of people, given that most Medicaid beneficiaries who can work already are doing so. Depending on how they are implemented, work requirements could adversely affect some people, who are unable to comply due to their health, family caregiving obligations or other reasons, by preventing them from accessing needed health coverage through Medicaid. Medicaid and Work Requirements 3 Table 1: Work Requirement Provisions in Pending House Manager’s Amendment to American Health Care Act as of March 20, 2017 State Year Condition Population Proposal Status of Eligibility Any As of Yes Includes: Participation for a period of time as Pending state October nondisabled, directed by the state in work activities as in could 1, 2017 nonelderly, approved in the TANF program: House elect nonpregnant option* Medicaid adults -unsubsidized employment -subsidized private sector employment Excludes: -subsidized public sector employment -pregnant women -work experience (including refurbishing through 60-days publicly assisted housing if sufficient post-partum, private section employment unavailable) -children under 19 -on-the-job training -sole -job search and job readiness assistance parent/caretaker in -community service programs family for child -vocational educational training (not to under age 6 or child exceed 12 months per individual) with disability -job skills training directly related to -individuals under employment age 20 who are -education directly related to married or head of employment for those who have not household and received high school diploma or maintain satisfactory equivalent secondary school or -satisfactory attendance at secondary equivalent program school or general equivalence course for attendance or those who have not already completed participate in -provision of child care services to education directly individual participating in community related to service program employment NOTE: *This is an option under state Medicaid plans. However, states electing a block grant as proposed by the House manager’s amendment to the AHCA can determine conditions of Medicaid eligibility. SOURCE: House Manager’s Amendment (Policy Changes), p. 4 (adding § 117) (March 20, 2017). Medicaid and Work Requirements 4 Table 2: Work Proposals in State Medicaid Expansion § 1115 Waiver Requests as of March 2017 State Year Condition of Population Proposal Status Eligibility Arizona 2015 Yes Able-bodied Work, actively seek Denied by CMS expansion and work, or attend school traditional adults or job training for 20 hours/week; also proposed voluntary work incentive program for non-medically frail expansion adults 2017 Yes Includes able- Work, actively seek State public comment bodied work, or attend school period completed, to expansion and or job training for 20 be submitted to CMS traditional adults hours/week; requires monthly verification and Excludes full- one year lock-out for time high school making false statement students, sole caregiver for family member under age 6, receiving temporary or permanent long- term disability benefits, determined physically or mentally unfit for work by health care professional Arkansas 2017 Yes Includes Work requirement Planning to submit expansion adults waiver request Indiana 2015 Yes Includes Work referral Not included as part expansion adults of waiver approval by CMS – state established separate voluntary state- funded work search and job training program Kentucky 2016 Yes – benefits Includes all able- Volunteer work, Waiver application suspended for bodied working employment, job pending with CMS failure to age adults search, job training, comply and education, or caring for not reinstated Excludes non-dependent relative until children, or person with disabling compliance for pregnant chronic condition for 5 full month women, hours/week in year 1 medically frail, and 20 hours/week in students, and year 2 primary caregivers of dependents Medicaid and Work Requirements 5 New 2015 No Included Referral to state job Not included as part Hampshire expansion adults counseling service if of waiver approval by unemployed CMS Ohio 2016 No Included Referral to work Waiver application expansion and development agency if denied in its entirety traditional adults not working 20 by CMS 18 and older hours/week Pennsylvania 2014 Yes - Included 20 hours/week of work Not included as part beginning in expansion and or complete 12 job of waiver approval by year 2, would traditional training and CMS; Governor lose eligibility adults, ages 21 employment-related Corbett planned to for 3 months, to 64 activities/month; Those offer incentives for then 6 months, working more than 20 Medicaid then 9 months Exemption for hours/week could have beneficiaries who for those premiums or cost- chose to participated noncompliance experiencing sharing reduced or in state-funded job crisis, serious other incentives training and work medical beginning in year 2 activity program; condition or Governor Wolf did temporary not pursue this condition that program prevents work search such as domestic violence or substance use treatment Excluded: seniors, children under 21, pregnant women, SSI beneficiaries, those in institutions, dual eligible; full and part-time students must register but do not have to complete work activities Utah 2014 No, although Included able- Automatic enrollment in Was not seeking state was bodied work program with waiver authority for considering expansion adults access to online work proposal and sanctions assessment, job overall waiver was related to training, and job never submitted to benefits under postings, upon Medicaid CMS other state application programs for noncompliance NOTE: Montana did not seek § 1115 authority for a work program as part of its Medicaid expansion waiver, but state law creates a state-funded voluntary program. SOURCE: KFF analysis of state waiver proposals. The Henry J. Kaiser Family Foundation Headquarters: 2400 Sand Hill Road, Menlo Park, CA 94025 | Phone 650-854-9400 Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270 www.kff.org | Email Alerts: kff.org/email | facebook.com/KaiserFamilyFoundation | twitter.com/KaiserFamFound Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.