Put Medicaid Back to Work Helping the Truly Unfortunate

Put Medicaid Back to Work Helping the Truly Unfortunate

Some Americans may soon have to punch a time clock to qualify for Medicaid.

Last month, the Trump administration announced that states could seek federal permission to require people to work, attend school, or otherwise contribute to the community in order to receive Medicaid benefits. Kentucky’s plan to mandate 80 hours of work per month was approved Jan. 12; less than two weeks later, 15 Kentuckians filed a lawsuit to block the plan. The feds have also green-lit Indiana’s proposed work requirements — and are reviewing applications from eight other states.

House Minority Leader Nancy Pelosi has called work requirements “spiteful,” “mean-spirited,” and a “shameful violation of the letter and spirit of Medicaid.” But the opposite is true.

Obamacare’s Medicaid expansion prioritizes able-bodied Americans over genuinely vulnerable populations. Work requirements would help give states the ability to re-focus their Medicaid programs on their neediest residents.

Medicaid was originally created to furnish health coverage to low-income children, their caretakers, pregnant women, the disabled and the destitute. But today, Medicaid is the largest health insurer in the country. It covers one-fifth of Americans and accounts for one of every six dollars spent on health care.

Obamacare is largely to blame for the explosive growth of the program. The law intended to expand Medicaid eligibility to all people making up to 138 percent of the poverty level, or just over $16,750 annually for an individual. The U.S. Supreme Court deemed that expansion optional in 2012; 32 states and the District of Columbia have opted for it anyway.

The number of people who have enrolled because of Obamcare’s Medicaid expansion — some 12.7 million Americans — is more than double initial estimates. The expansion population has ballooned in part because Obamacare encourages states to enroll able-bodied adults — even if it’s at the expense of Medicaid’s original beneficiaries.

Thanks to Obamacare, the federal government took care of 100 percent of the cost of coverage for those in the expansion population between 2014 and 2016. This year, it’ll cover 94 percent of the cost. Next year, that rate declines to 93 percent, and then to 90 percent in 2020 and beyond.

By contrast, the federal government picks up between 50 percent and 75 percent of the cost of coverage for Medicaid’s original beneficiaries.

Consequently, cash-strapped states looking to reduce their health care spending have a far stronger incentive to cut support for vulnerable patients than for able-bodied individuals.

That’s exactly what some states have done. The Illinois General Assembly, for instance, voted to cut traditional Medicaid on the exact same day it approved Obamacare’s expansion.

After Ohio expanded Medicaid in 2015, it changed its system for determining disabilities. The change booted 34,000 people from the program’s rolls. About 60,000 disabled people are on waiting lists for services from the state’s Medicaid program.

Medicaid’s share of state budgets has grown from 6 percent to more than 15 percent in the past 20 years. States can barely afford the Medicaid populations they have. Enrolling millions of able-bodied adults, even if the federal government is covering most of the cost, is stretching their budgets to the breaking point.

Work requirements can ease some of this fiscal pressure — and prioritize the health of the most disadvantaged. Further, such requirements can put beneficiaries on a path off public assistance. It’s far better for taxpayers, the economy, and the beneficiaries themselves to secure insurance coverage through an employer than through a perpetually strapped state agency.

Obamacare’s Medicaid expansion rewards states for prioritizing newly eligible, better-off beneficiaries over the vulnerable populations the program was created to help. If that isn’t a “shameful violation of the letter and spirit of Medicaid,” as Rep. Nancy Pelosi puts it, then nothing is.

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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.