The Future of Medicaid Work Requirements

As expected, on January 11, 2018, the Centers for Medicare & Medicaid Services (CMS) released its guidance around implementing work requirements through 1115 waivers. Ten states have applied for such a waiver and have pending proposals at CMS.

Under the new guidance, states may propose programs that mandate work or community engagement requirements on beneficiaries who are non-elderly, non-pregnant, and non-disabled. CMS makes an argument that such a waiver is valid because it promotes “better mental, physical, and emotional health in furtherance of Medicaid program objectives.” Given this attenuated connection, we will likely see many lawsuits around the legality of this new guidance. Prior administrations have denied such proposals for the very opposite reason, stating that such proposals would not further Medicaid’s purpose of promoting health coverage and access.

Shortly after the release of the guidance, Kentucky received approval for its waiver, which incorporates work and community engagement requirements. Under the waiver, beneficiaries aged 19-64 who are non-disabled are required to participate in either work or community engagement activities for 80 hours per month. The activities include “employment, education, job skills training, and community service.” The waiver exempts several groups, such as former foster youth, pregnant women, primary caregivers, the medically frail, full-time students, and those with an acute medical condition. The waiver also imposes premiums of up to $15 per month for certain beneficiaries.

Perhaps the more burdensome part of the waiver conditions is not the work requirement itself but the new reporting requirements the waiver sets up for the state. In reality, most Medicaid-covered adults are already either working or have an eligible medical condition, are caregivers, or are enrolled full-time in school. According to Kaiser Family Foundation, this leaves about 7% of the population to whom this policy would apply. However, individuals must now submit proof they participated in the above activities on a regular basis or be suspended from Medicaid coverage. This would likely lead to many gaps in coverage as eligibility would then be reinstated the next month after the individual completes his or her requirement or participates in a state-approved health literacy or financial literacy course.

So what is next for these waivers? First, we will likely see CMS approve several more state proposals given the new guidance and the similarity between proposed parameters and conditions of eligibility. On the state level, Kentucky is already anticipating and preparing for legal action around the newly approved waiver. Governor Bevin quickly released a chilling executive order aimed at tempering such legal actions by directing the Health and Family Services Cabinet to terminate Medicaid Expansion in Kentucky should a court find the state’s newly approved waiver illegal.

Finally, the new guidance presents a new era for Medicaid, one where we will see further challenges for the program through both regulatory and legislative action. While congressional GOP leaders are now signaling entitlement reform may not be on the agenda for 2018 after all, be on the lookout for bills that aim to shift the program to a block grant or per capita model as well as proposals from CMS such as the Medicaid managed care regulation currently slated to be released in August and expected to roll back much of the regulation put in place during the Obama administration in 2016.

 

Resources:

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