The Secretary of Health and Human Services (HHS) has the authority to alter certain Medicaid requirements for states that submit a section 1115 demonstration waiver that is subsequently approved. The pertinent statute that authorizes these waivers, 42 U.S.C. 1315 §1115, has been around since Medicaid’s beginnings in 1965. However, recently these waivers have been used to add a work requirement as a condition of receiving Medicaid.
A number of states have sought waivers to implement work requirements in their Medicaid program – Arkansas, Arizona, Iowa, Indiana, New Hampshire, Kentucky, Kansas, Maine, North Carolina, Mississippi, Ohio, Utah, Oklahoma, and Wisconsin. The Medicaid work requirement is a brewing political battle between Republicans and Democrats. President Obama refused to grant any waivers detailing work requirements, while President Trump has voiced his approval for such waivers and is swiftly granting them.
Kentucky was one of the first states to try to implement the work requirement into their Medicaid program, having their waiver granted in January 2018 with implementation of the rule to begin July 1, 2018. The new rule requires Kentucky Medicaid recipients to work, look for work, or participate in community service programs for 80 hours each month. The requirement would not apply to pregnant women, the elderly, disabled recipients, full-time students, or primary caregivers of dependents. (Some subsequent state plans also exempt the homeless, incarcerated, those in substance abuse treatment, etc.) The mandate would affect roughly 350,000 Kentucky Medicaid recipients, and it was estimated to save Kentucky $2.4 billion over the first five years.
Just days before the work requirement mandate in Kentucky was to take effect in July 2018, a federal judge blocked the requirement in a landmark decision. US District Court Judge James Boasberg, appointed by President Obama, ruled that the because the health secretary did not consider the impact of the wavier on Kentucky’s Medicaid coverage in detail, it was arbitrary and capricious, and so was struck down. Opponents argued that the requirement was afoul of Medicaid’s objective of providing health care to the poor. In response to Boasberg’s decision, Kentucky governor Matt Blevin cut dental and vision coverage for approximately 500,000 Medicaid recipients. (These dental and vision benefits were recently reinstated.)
In August 2018, a similar lawsuit was filed in Arkansas to prohibit the Medicaid work requirement via an 1115 waiver there. Arkansas had implemented their work requirement in June 2018, being the first state in the nation to do so. The National Health Law Program, Legal Aid of Arkansas, and Southern Poverty Law Center filed suit against President Trump in U.S. District Court in August 2018. The suit alleges that the work requirements run afoul of Medicaid’s objectives.
Arkansas plans to implement the work requirement in stages. In 2018, recipients aged 30 to 49 will be subject to the new rule. In 2019, the age group will widen to include 19-29-year-olds. Arkansas Governor Asa Hutchinson stated “This is not about punishing anyone. It’s about giving people an opportunity to work. It’s to give them the training that they need. It’s to help them move out of poverty and up the economic ladder.” (CNN Money report, Thousands of Arkansas Medicaid Recipients Must Start Working in June, March 5, 2018)
States that are pursuing a Medicaid work requirement do not have identical plans, but many are finding that they are facing scrutiny. Despite the pending and looming litigation, many states are staying the course and continuing with their work requirement waiver programs. “We are fully committed to work requirements and community participation requirements in the Medicaid program,” stated HHS Secretary Alex Azar, after the July ruling striking down the work requirement for Medicaid recipients in Kentucky. (LA Times, Despite a judge’s disapproval, Trump administration is doubling down on Medicaid restrictions. August 20, 2018; http://www.latimes.com/business/hiltzik/la-fi-hiltzik-medicaid-trump-20180820-story.html#)
According to a Modern Healthcare article, of the 80 million Medicaid recipients, less than one-third are working-age adults. Of that group, 60% are already working full- or part-time jobs. Among the remaining 10 million, 90% would be exempt from the work requirement mandate because they are disabled, full-time students, a primary caregiver, or otherwise categorically exempt. The remaining 1 million recipients are able-bodied and unemployed, and would be subject to the work requirement mandate.
Proponents of the Medicaid work requirement tout significant financial savings as a benefit of the rule, as states struggle to meet the financial demands of rising Medicaid costs. Other benefits include increasing work engagements amongst the poor, to incentivize financial gain and enable recipients to transition out of the Medicaid program. Opponents state that the work requirement could block those who need medical care from receiving it, and would cause an added administrative burden to already overworked Medicaid employees. Also, opponents cite a “catch-22” situation where someone who works for minimum wage will make just over the threshold to qualify for Medicaid while not making enough to afford healthcare on their own.
A March 2017 survey conducted by the Kaiser Family Foundation found that most working Medicaid recipients were in the following industries, in order from greatest number of recipients to least: restaurant and food services, construction, elementary and secondary schools, grocery stores, hospitals, department stores, home health care services, services to buildings and dwellings, nursing care facilities, and child day care services.
Other recent trends in Medicaid waivers – implementing premiums, drug testing, and life-time caps on benefits – indicate a more restrictive approach to Medicaid. The pending litigation regarding work requirement waivers and the upcoming mid-term elections will have a significant impact on Medicaid waivers and policies going forward.