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Medicaid work requirements would be counterproductive and costly

Posted on April 18, 2017

Louisiana’s Medicaid program uses a mix of state and federal dollars to finance health coverage for people who are poor, elderly or disabled – and who are often left out of the employer-based healthcare system. Almost 1.6 million Louisianans rely on the program.

A bill scheduled for its first hearing this week (Senate Bill 188) would require able-bodied, working-age adults without dependents to work at least 20 hours per week to keep their coverage. While public policy should certainly encourage people to work, this bill would create a largely unnecessary and costly layer of administrative bureaucracy that could produce unintended consequences. Connecting the relatively small percentage of Medicaid enrollees who are able-bodied, unemployed adults to work is a laudable goal, but there are more strategic and efficient ways to do so.

Who gets Medicaid?

The majority of Medicaid recipients are not able-bodied, working age adults. Persons in the “traditional” Medicaid population (non-Medicaid expansion enrollees) are categorically unable to work, because they are children, seniors, and persons with disabilities. In Louisiana, this group composes two-thirds, or 67 percent, of the state’s total Medicaid population.

In July 2016, Louisiana’s Medicaid eligibility was expanded to include working-age adults with annual incomes below 138 percent of the federal poverty line, or about $16,400 for a single person. Most Medicaid expansion enrollees either have a job, or share a home with someone who does. Medicaid-eligible workers are typically uninsured for one of two reasons: their employer does not offer insurance, or they cannot afford the premiums in their employer-sponsored insurance.

Medicaid and the working poor

Nationwide, more than 6 in 10 people (59%) who qualify for Medicaid under the expansion are working. Nearly 8 in 10 (78%) are in a family with at least one worker. What’s more, most working Medicaid expansion beneficiaries have full-time jobs. More than two-thirds of Medicaid expansion households have a full-time worker (68%) and another 15% include a part-time worker. Despite their working status, these households’ annual earnings still fall below 138 percent of the federal poverty line, making them eligible for Medicaid under the expanded eligibility rules.

Most able-bodied Medicaid recipients who are not working have circumstances that make it difficult for them to work. The Kaiser Family Foundation found that 18 percent are enrolled in school, 8 percent are looking for work and 28 percent are caring for the home or family. More than one-third of those not working report medical barriers to employment that do not reach the level of full disability.

For many of these low-income adults with tenuous medical circumstances, Medicaid expansion has allowed them access to health care and treatment for the first time in years. Maintaining these gains is critical to getting people back to the workforce. For example, a working-aged adult with unmanaged diabetes may not be able to hold a job, but with access to ongoing treatment and diabetes management through Medicaid, they may be able to return to work.

Medicaid in Louisiana by the numbers

As of January, Louisiana’s Medicaid rolls include roughly 496,000 working-age adults. Applying national statistics means nearly 293,000 were working, while 36,600 were enrolled in school and 16,300 were actively looking for work. Roughly 57,000 are homemakers. After subtracting the estimated portion that are ill, disabled, or retired, there are a remaining 6,100 able-bodied adults in the state receive Medicaid but do not work. This is the population that would be targeted by SB 188.

This small group of Medicaid beneficiaries is not a constant group of people. The circumstances of Medicaid beneficiaries often change frequently, with seasonal work, layoffs, pregnancy, and other circumstances creating shifts in income and work status. A work requirement would continuously force beneficiaries on and off the Medicaid rolls, disrupting continuity of care and increasing workload for eligibility workers.  

Work requirements in Louisiana’s Medicaid program would create new administrative complexities and costs for the state. State eligibility workers – or the private managed care companies that oversee most Medicaid enrollees – would have to track enrollees’ work status, process exemptions for family caregivers, students, and others, and enroll, disenroll, and re-enroll individuals at depending on their changing work status. An analysis of work requirements in the Temporary Assistance for Needy Families (TANF) program found that staff spent more time tracking work hours than providing services to clients.

Penny wise, pound foolish

Medicaid work requirements have the potential to drive up the cost of healthcare for everyone. Those who lose Medicaid coverage because they don’t meet the work requirements will still get sick and require medical care. They may end up being hospitalized for avoidable health problems, but won’t have insurance to pay for that care. Unpaid costs will fall on local hospitals, the state, and other health care providers. Eventually the costs of uncompensated care are passed on to all health care consumers in the form of higher premiums.

Finally, there are better ways to promote work for the relatively small percentage of Medicaid enrollees who are able-bodied but not working. Individuals who experience long-term unemployment or drop out of the workforce often face significant barriers to re-entering the workforce. Connecting these individuals to voluntary skill-building, job training, and job placement programs has been shown to be a more effective way of increasing employment rates than putting in place a punitive measure that may worsen their health and ability to work. Three states – Indiana, Montana, and New Hampshire – have voluntary, state-funded job search and work training programs for Medicaid beneficiaries.  These programs focus work readiness and training resources on the Medicaid beneficiaries who truly need help finding a job, rather than casting a wide net that drains the state’s resources and reduces access to health insurance and health care.

By Jeanie Donovan

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