Blocking Medicaid Work Requirements Is Unwise

Medicaid expansion in Kentucky and Arkansas could be on life support. Late last month, Judge James E. Boasberg of the U.S. District Court for the District of Columbia blocked the two states’ attempts to require able-bodied adults to work as a condition of receiving Medicaid coverage.

Last week, the federal Department of Justice announced it would appeal the decision.

Judge Boasberg called the work requirements “arbitrary and capricious.” Nothing could be further from the truth. The rules would help cash-strapped states preserve Medicaid for the truly needy. Without them, some states may have to scale back their expansion of the program.

Thirty-six states and the District of Columbia have decided to comply with Obamacare’s order to expand Medicaid to everyone with income up to 138% of the federal poverty level, or about $17,200 for an individual. To coax states into participating, Obamacare covered the entire cost of coverage for these new enrollees between 2014 and 2016. The federal government began handing states a small share of the bill in 2017; in 2020 and thereafter, states would be responsible for 90% of the cost of expansion.

States are struggling to shoulder their share of the cost. Enrollment numbers have come in double, triple, even quadruple what states had expected.

In Kentucky, for example, the Kaiser Family Foundation predicted that Medicaid expansion would attract 224,000 new enrollees. Actual enrollment was more than double that. By the third quarter of 2016, more than 500,000 Kentuckians who were ineligible for Medicaid prior to Obamacare’s passage were getting free health care. Some of these folks left the workforce or cut hours to qualify.

Meanwhile, experts predicted that 194,000 Arkansans would sign up for Medicaid under the expansion. Instead, as of October, more than 252,000 had joined.

Nationwide, in states with available data, average enrollment was more than double original estimates, according to a report from the Foundation for Government Accountability. The cost of these new enrollees was 49% higherthan the federal government had anticipated.

In Kentucky, the cost of the expansion’s first two and a half years was more than twice official projections. Last year, the state’s health secretary, Adam Meier, said the state would be short $296 million by 2020.

Ohio’s expansion went $4.7 billion over budget in its first 30-plus months. Oregon went beyond its budget by $2 billion in the first 18 months of expansion.

Rather than roll back the Medicaid expansion or raise taxes, some states have considered work requirements, to preserve the program for those who can’t take care of themselves.

Kentucky’s plan would have required all able-bodied individuals under age 65 to work, volunteer, or take classes for 80 hours a month. Arkansas’s requirements were similar—those aged 19 to 49 had to log 80 hours per monthworking, volunteering, or in school.

Seven other states have received permission from the federal government to impose work requirements. Six more are awaiting federal approval to do so. And the Trump administration has said that it will continue to review state requests to implement work requirements, Judge Boasberg’s ruling notwithstanding.

The idea is sound. Getting a job will help these people become self-sufficient and eventually get off Medicaid. A study by the Buckeye Institute found that Medicaid work requirements like Kentucky’s would end up boosting workers’ lifetime earnings by nearly $1 million.

Further, unemployment is at record lows, and the U.S. economy has added jobs for more than 100 consecutive months. So able-bodied individuals have little excuse for sitting on the employment sidelines.

Work requirements also target a tiny portion of the Medicaid population. According to the Kaiser Family Foundation, just 7% of non-elderly adults on Medicaid nationwide would run afoul of the work requirements contemplated by most states. The actual share is even smaller, given that most states aren’t considering such requirements.

But Judge Boasberg wasn’t persuaded. He questioned how work requirements “would implicate the ‘core’ objective of Medicaid: the provision of medical coverage to the needy.”

Able-bodied adults stretch the definition of “needy.” Up until Obamacare, eligibility for Medicaid was restricted to families, children, pregnant women, and the disabled with incomes below the poverty line. Those who were able to work and unencumbered by family were expected to get a job and take care of themselves, rather than rely on taxpayers.

In fact, there’s evidence that funneling so much money to able-bodied adults has distracted Medicaid from meeting the needs of the beneficiaries it was created to serve. According to a 2018 report, nearly 250,000 truly needy individuals—like those with intellectual and developmental disabilities, spinal cord damage, and traumatic brain injuries—in states that had expanded the program were waiting for needed care. Since expansion began, at least 21,900 people on waiting lists for Medicaid care have died.

The U.S. Supreme Court may have the final say on work requirements. If the high court upholds Judge Boasberg’s ruling, then states could face a stark choice—cancel the expansion altogether or cut spending on the Medicaid benefits that help the truly needy.

It’s hard to see how either of those choices would help advance the “core objective of Medicaid.”

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.

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