February 18, 2018
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A work requirement for Medicaid isn’t ‘cruel’

Manuel Balce Ceneta | AP | BDN
Manuel Balce Ceneta | AP | BDN
Rep. Ron Wyden, D-Oregon, with Rep. Richard Neal, D-Massachusetts., left, and Senate Minority Leader Chuck Schumer of New York, right, speak during a news conference on Capitol Hill in Washington, Wednesday, Oct. 4, 2017, urging Republicans to abandon cuts to Medicare and Medicaid. More than two dozen Senate Democrats are questioning the legality of the Trump administration's new policy that allows states to require low-income adults to work in order to get Medicaid coverage. In a letter to the administration, the lawmakers say work requirements are out of line with the plain meaning of the Medicaid law, as well as with congressional intent.
By Michael R. Strain, Bloomberg View

“The Trump administration’s action today is cruel,” Rep. Frank Pallone, D-New Jersey, said. The new policy is “the latest salvo of the Trump administration’s war on health care,” according to a health care advocacy group. “The pain is the point” of the policy, columnist and economist Paul Krugman wrote.

They were attacking the Trump administration’s decision last week to allow states to impose work requirements on Medicaid beneficiaries. But far from being a “cruel” action designed to inflict “pain” on the vulnerable, the administration’s decision is completely reasonable.

Let’s start with the facts. First, the work requirements are targeted for able-bodied adults of working age. They do not apply to the elderly, to pregnant women or to the disabled. In addition, “work” is construed broadly to include community service, education, job training, volunteer service and treatment for substance abuse, among other potential forms of community engagement or self-betterment.

Furthermore, the administration is not forcing this policy on the states. Instead, states that wish to impose work requirements must seek permission from the Centers for Medicare and Medicaid Services. Currently, 10 states have done this. (The Obama administration denied such requests.) If the federal government gives approval, the states may make work activities a condition for Medicaid eligibility. But they can also be flexible in how far to go; for example, they might require work activities only as a condition for paying reduced co-payments (among the beneficiaries subject to them).

Take the case of Kentucky, whose proposal was the first to be approved. As part of a five-year demonstration project, Kentucky’s work requirement exempts the groups mentioned above, as well as primary caregivers of a dependent, the medically frail or those with an acute medical condition that prohibits work, and full-time students. Beneficiaries subject to the requirement must complete 80 hours of work activities a month to remain eligible for Medicaid. Community service and job training qualify as work.

If these conditions don’t sound draconian, that’s because they aren’t.

Opposition to the very idea of making Medicaid benefits conditional on work might be understandable, given the history of the program. For most of its existence, Medicaid benefited groups of people who shouldn’t face such a requirement to receive health care — low-income single-parent households, the elderly and the disabled.

But the Affordable Care Act, signed into law by President Barack Obama, changed this by allowing states to expand Medicaid eligibility to nonelderly, nondisabled adults (including those without dependents) with incomes up to 138 percent of the poverty line. As of last month, 32 states had carried out this expansion. According to the Kaiser Family Foundation, about 25 million Medicaid beneficiaries are covered due to the ACA’s expansion.

The ACA changed the very nature of the Medicaid program by expanding it to a large group of people who can reasonably be expected to work. Traditional opposition to Medicaid work requirements therefore needs to be re-examined. (The majority of the people who qualified for Medicaid because of its expansion are already working, demonstrating that work is not excessively onerous among many in this population.)

A more persuasive objection to Medicaid work requirements involves the practicality of enforcing them for any individual beneficiary. Say an individual is removed from the Medicaid rolls because he doesn’t complete his work requirement. If he subsequently gets sick and goes to the hospital, he will receive treatment. He will be re-enrolled in Medicaid, or the cost of his treatment will be absorbed in some other way. Either way, he won’t (and shouldn’t) be denied care, which could render the work requirement toothless.

This is related to a second objection. It’s possible that many healthy, working-age adults without dependents — a group that is generally less in need of medical care than the traditional Medicaid population — might choose not to enroll in the program rather than meet the work requirements, only to enroll later if they get sick or injured.

States might address these concerns by setting compliance goals for the population of beneficiaries, rather than for each individual. For example, a state might set its goal as having 70 percent of targeted beneficiaries working, rather than all targeted beneficiaries. (A similar structure exists for work requirements in the federal cash welfare program.) This would allow states flexibility in cases where work requirements aren’t met, while still enforcing requirements on the solid majority of beneficiaries.

While the practical concerns are reasonable, they shouldn’t stop the implementation of work requirements before they start. An important goal of the state-level demonstration projects is to find out what works and what doesn’t. They should be carefully designed to gather evidence on these issues — and others, including the administrative burden placed on beneficiaries — so that the work-requirement system can be improved in the future.

At its core, this is a debate over the purpose of the social safety net. Among healthy, working-age adults who aren’t the primary caregiver for a dependent, public policy should be designed to combat idleness, to increase community attachment, and to increase work rates. Medicaid work requirements aren’t punitive. Instead, they reflect proper social expectations. They send a message that if you can contribute to society, then you should. That message matters.

Michael R. Strain is a Bloomberg View columnist. He is director of economic policy studies and resident scholar at the American Enterprise Institute. He is the editor of “The U.S. Labor Market: Questions and Challenges for Public Policy” and the co-editor of “Economic Freedom and Human Flourishing: Perspectives from Political Philosophy.”

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