To make the Affordable Care Act’s (ACA) Medicaid expansion more politically palatable, a number of conservative states have used 1115 Medicaid demonstration waivers to implement personal responsibility focused policies. These waivers have been used, for example, to charge Medicaid recipients premiums and to institute cost sharing above statutory limits. Under the Obama administration, four states applied for waivers to integrate work requirements into their Medicaid programs, arguing work requirements would help recipients move out of poverty and gain access to private coverage. The Obama administration denied these requests because they argued work requirements could “undermine access…and do not support the objectives of the Medicaid program.”
Soon after taking office, the Trump administration indicated its support for Medicaid work requirements. In March 2017, Tom Price, secretary of the Department of Health and Human Services, and Seema Verma, administrator of the Centers for Medicare and Medicaid Services (CMS), sent a letter to state governors stating that, “It is our intent to use existing Section 1115 demonstration authority to review and approve meritorious innovations that build on the human dignity that comes with training, employment and independence.”
CMS is currently considering five 1115 waiver requests that include work requirement provisions. Kentucky submitted its waiver request to CMS in August 2016. Its work requirement was described as the “cornerstone” of the waiver, with the following rationale: “Government assistance programs can only lessen the burdens of poverty—beneficiaries may only truly escape the bonds of generational poverty and improve their quality of life through obtaining stable employment….” Indiana submitted its request for a Medicaid work requirement this past May as an amendment to an existing waiver request. Verma has recused herself from considering these two waivers in her new role at CMS because she helped develop them in her prior role as a health care consultant. This summer three more states requested that CMS allow work requirements for Medicaid: Arkansas and Utah submitted amendments to existing 1115 waivers under consideration in June and August respectively, and Maine submitted an 1115 waiver in August 2017.
The Kentucky Health and Family Services website says that its 1115 waiver request is “currently pending approval.” If this is true, Kentucky will be the first state in Medicaid’s more than 50-year history to require recipients to work or do work-related activities to receive Medicaid coverage. Under the proposed plan, recipients will be required to spend 20 hours a week working, volunteering, searching for a job, participating in job training, or in school (Note 1). The requirement applies to Medicaid recipients ages 19–64 and excludes those who are primary caregivers of a child or a disabled adult, pregnant, medically frail (as determined by the state), recipients of Supplemental Security Income (SSI), or institutionalized. Those who do not complete the required 20 hours a week will have their Medicaid benefits suspended until the requirement is completed for a full month.
Kentucky’s demonstration waiver, entitled “Helping to Engage and Achieve Long Term Health” or Kentucky HEALTH, includes several other work-related provisions. One will require Medicaid recipients to pay monthly premiums, which are intended to “discourage dependency on public assistance and encourage members to transition to commercial health insurance coverage.” The premiums will be on a sliding scale, costing $1 a month for those with incomes below 25 percent of the federal poverty level (FPL) and up to $15 a month for those with incomes above the FPL. The cost will increase by 50 percent a year for those above the FPL starting in their third year, until the premium reaches $37.50 a month. If premiums are not paid after 60 days, recipients will face a six-month penalty: Recipients below the FPL will have to pay copayments for all medical services, and those above the FPL will temporarily lose Medicaid coverage (Note 2).
Arguments for and against work requirements have been made repeatedly in the media, particularly since the beginning of the Trump administration. Those who support work requirements claim they create a culture of work, provide a pathway out of poverty, reduce reliance on public programs, and ultimately improve people’s health. Those who oppose work requirements argue that few able-bodied recipients are not working, that health is a precondition for work, that the policy would hurt the most vulnerable, and that it is a thinly veiled strategy to reduce the number of Medicaid recipients. There have been few opportunities, however, to hear what Medicaid recipients think about requiring work for Medicaid coverage.
To understand recipients’ perspectives on Medicaid work requirements, I conducted a series of focus groups with 79 low-income adults in Louisville, Kentucky, in mid-June. Participants included current Medicaid recipients as well as past recipients who now earn too much to qualify for Medicaid. Very few were aware of the proposed changes, but when the proposal was described, they questioned how well those who created Kentucky HEALTH understood their lives and found serious flaws in the proposal’s underlying assumptions.
The Working Poor Are Still Poor
Participants thought it was unrealistic to assume that requiring people to work as a condition for receiving health insurance would enable them to rise out of poverty and smoothly transition to employer-based coverage. Of the focus group participants receiving Medicaid, almost one-third were working, yet their incomes were low enough that they still qualified for Medicaid. One woman explained, “I’m working, I’m in school, and I’m raising my child as a single parent. I’m doing everything he [the governor] claims I’m not doing. But I still qualify.”
Those whose incomes were just above the Medicaid eligibility cutoff faced painful choices about how to make ends meet. As one woman explained, “You have to shuffle what bills are going to get paid. My kids can’t go without eating.” While many of these people had incomes that would qualify them for premium tax credits and cost-sharing subsidies under the ACA Marketplace plans, they were not eligible for either because they had been offered employer-based coverage. As one woman with a college degree and a full-time job who had recently dropped her $220 monthly employer-sponsored coverage explained, “I don’t really qualify for the assistance, but I don’t make enough to make private care affordable…. There is that gap of people there that people don’t realize.”
Some in “that gap” with employer-sponsored coverage reported going into debt because they couldn’t pay their health care bills. Others reported skipping needed care. One participant said she had called the pharmacy the night before to tell them which medicines to put back, “because I just can’t afford them all, so I have to pick the ones that I feel I’m in dire need of right now and I have to go with that.”
Paying Premiums Will Challenge Both Those Working And Not Working
While the Kentucky HEALTH proposal states that it “encourages members to make upfront monthly premium contributions to prepare for commercial market coverage policies,” focus group participants thought premiums would just increase their financial struggles. Those employed described having to cut back on other essentials. One participant said, “I’m already nickel and diming it, if you take another $15 out, then we gonna be eating ramen noodles.”
There were a number of participants who described being unable to get paid employment because of prior convictions, lack of jobs accessible by public transportation, or difficulty passing a credit check. These participants pointed out an incongruity between having volunteer hours count for the work requirement but requiring payment of a monthly premium. “Nothing wrong with having to volunteer. But the premiums shouldn’t go up. When you are volunteering, it should count for your premiums,” one man pointed out.
Additionally, several participants found the idea that they needed to pay premiums as practice for receiving employer-sponsored coverage to be insulting. One man described it as “more shame, more judgement” and said: “The rationale is like assuming that poor people are dumb, or poor people don’t have experience paying bills. They do. They probably do it better than people with a lot of money, because they know how to juggle this and juggle that, and stretch that dollar.”
Premiums Unlikely To Reduce People’s Need For Medicaid
While the Kentucky HEALTH proposal stated that Medicaid premiums were intended to “discourage dependency on public assistance,” focus group participants highlighted how important Medicaid coverage was for their lives. Medicaid enabled them to get needed care without going into debt, and they described the possibility of losing it as “heartbreaking.” They emphasized that there was just too big a differential between the cost of Medicaid coverage (even with premiums) and the cost of employer-sponsored coverage, costing several hundred dollars a month with large deductibles.
To maintain Medicaid eligibility, a number of participants described making significant financial sacrifices. Several described passing up overtime (“I can’t do it. I want to, but can’t do it”). One woman described taking a management position with a fast food company that paid $14 an hour, then opting to drop back to a crew manager position that paid $8 an hour, because she lost Medicaid at the higher salary but could not afford private coverage.
Solving The Wrong Problem
Overall, the focus group participants thought that Kentucky HEALTH would not address the absence of affordable private insurance or the lack of support during the transition from Medicaid to private coverage. Instead, in their view, Kentucky HEALTH aimed to force the small percentage of able-bodied Medicaid recipients who currently do not work to find employment. Consistent with Ku and Brantley’s recent blog post, focus group participants who were not working were very vulnerable. A number of them described themselves as being either mentally or physically disabled, despite having been denied SSI. Others were homeless and described a daily struggle to secure food, showers, and housing. The state of Kentucky is likely to be inundated with requests from these most vulnerable people for the “frail” exemption from the work requirements.
Instead of Kentucky HEALTH’s focus, which one participant said, “is not going to fix the problems that exist,” participants wanted a bridge between Medicaid and employer-sponsored coverage. Their experiences highlight an underacknowledged problem with the ACA—that low-income people become ineligible for premium or cost-sharing assistance once they are offered employer-sponsored coverage. A participant explained, “Give me a step and a transition and a bridge and a way to get there.” They proposed several creative ways to create such a transition, such as allowing people who earn more than the Medicaid eligibility cut-off to pay a higher premium or volunteer to continue Medicaid coverage for a transitional period. One woman suggested that the state put the Medicaid premiums recipients paid into a special health savings account that recipients could use to pay for private coverage when they earned too much for Medicaid.
Eleven other states are currently developing work requirement provisions for Medicaid or have already done so. The findings from this qualitative inquiry underscore the importance of identifying the pressing health coverage challenges faced by low-income Americans to ensure that new programs actually address them. One participant, reflecting on the goals of the Kentucky HEALTH program said: “There is some goodness in these ideas, I just think they don’t get it…. They just don’t know, they can’t relate.”
The original waiver request included a stepped implementation of the work requirement, starting with five hours a week and increasing the requirement by five hours every three months to reach a 20-hour-a-week requirement after 12 months. In July 2017, Kentucky submitted an operational modification to reduce the implementation complexity to require 20 hours a week.
There is an early re-entry option. If a recipient pays his or her past debt and current month’s premium and participates in a financial or health literacy course, he or she can receive Medicaid before the six-month penalty period ends.
I would like to thank the focus group participants for their candor and trust, as well as Family Health Centers, Inc., and New Directions Housing Corporation for hosting the focus groups in Louisville, Kentucky.