Arizona Patients Should Welcome Medicaid Work Requirements

Arizona Patients Should Welcome Medicaid Work Requirements

Arizona just received the Trump Administration’s go-ahead to impose work requirements on Medicaid beneficiaries.

Under the policy, able-bodied enrollees between the ages of 19 and 49 will have to spend 80 hours a month working, attending school, or giving back to their community in some way. Arizona will be the eighth state to institute such requirements.

More states should seek the Trump administration’s blessing to follow suit.

Medicaid was created to provide health care to the truly needy — like children without parental support, the disabled, and the impoverished elderly. But it’s grown into the largest health plan in the United States, covering 20 percent of the population.

It’s hard to believe that more than 66 million Americans are so destitute that they’re unable to take care of themselves and need public health insurance.

The explosive growth of Medicaid is largely a consequence of Obamacare’s expansion of the program. Thirty-six states and the District of Columbia followed Obamacare’s diktat and made the entitlement available to all citizens earning up to 138 percent of the poverty line, or just under $17,240 for an individual.

Idaho, Nebraska, and Utah are among the latest to expand Medicaid; voters in each state approved expansion at the ballot box this past November. Maine’s new governor, Janet Mills, signed an order to expand Medicaid on her first day in office this year. Montana’s voters rolled back their expansion of the program at the polls this past November; it will expire at the end of June.

The federal government pays states to comply. This year, the feds are covering 93 percent of the cost of Medicaid coverage for this expansion population; next year and thereafter, the federal share will be 90 percent.

That’s significantly more than the 50 percent to 77 percent that states receive from the federal government to help cover the cost of care for Medicaid’s legacy population.

In other words, Obamacare made it more financially advantageous for states to expand their Medicaid programs to able-bodied, working-age adults than to make sure that all those for whom the program was originally intended were enrolled.

Unsurprisingly, Medicaid is now dominated by the expansion population. Able-bodied, working-age Americans account for 61 percent of Medicaid’s rolls, according to a recent report from the president’s Council of Economic Advisors. Of that group, more than half don’t work.

That these Americans ought to contribute something to their communities in return for free, taxpayer-funded health coverage is only reasonable.

Arizona’s policy specifically exempts pregnant women, those with serious mental illness, recipients of disability benefits, former foster children up to the age of 26, the homeless, and a host of other genuinely disadvantaged groups. Ultimately, the work requirements will affect about 120,000 beneficiaries — out of Arizona’s Medicaid population of more than 1.5 million.

Some Arizonans may be unwilling to comply — and thus drop out of the program. But states need to find ways to rein in Medicaid spending. It’s the second-largest line item in many state budgets and is thus crowding out spending on other government services, including education and infrastructure. The program cost taxpayers nationwide more than $581 billion in 2017. In Arizona, the entitlement accounted for 14 percent of state spending in 2016.

Further, it should be the goal of policymakers to get people off Medicaid — and into private coverage, whether through an employer or purchased on the private market.

Obamacare’s Medicaid expansion perversely incentivized people to work fewer hours or remain unemployed so that they could keep their government-funded coverage. Work requirements address this unintended consequence by asking beneficiaries to take steps toward financial independence.

In Ohio — another state pursuing work requirements — this new incentive structure could raise the lifetime earnings of those who leave Medicaid by nearly $1 million, according to a recent study by the Buckeye Institute. For able-bodied individuals who remain on Medicaid and work, lifetime earnings stand to increase by $323,000 for men and $212,000 for women.

Finally, and perhaps most importantly, a policy that pushes the voluntarily idle off of Medicaid’s rolls would help states focus their limited public resources on residents who can’t help themselves.

Medicaid was intended as an insurer of last resort for America’s least well-off, not as a subsidy for those who choose not to work. Arizona’s proposed Medicaid requirements are an attempt to restore the program’s original purpose — one that other states would do well to emulate.
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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.