The Biden administration took steps in February to rescind one of its predecessor’s most controversial health care policies — Medicaid work requirements.
Under the Trump administration, the Centers for Medicare & Medicaid Services (CMS) allowed states to apply for waivers that would require Medicaid enrollees to work, apply for jobs or take classes, typically for about 80 hours a month. The requirements were touted as a way to encourage heathy people to work and, thus, increase their standard of living. The Trump administration also said the requirements would keep Medicaid financially viable.
Opponents, however, said the work requirements were unlawful and put health care coverage for thousands of Americans at risk — an argument that became more potent during the COVID-19 pandemic. In a letter to states indicating it would reverse the policy, Biden’s CMS said it had “serious concerns” about new policies “that risk a substantial loss of health care coverage or benefits in the near term.”
“The uncertainty regarding the lingering health consequences of COVID infections further exacerbates the harms of coverage loss or lack of access to coverage for the Medicaid beneficiaries,” the agency wrote.
Under the Trump administration, the policy was used sparingly. Ten GOP-led states applied for the waiver and were approved or “considered approved” and several more had applications pending, but most were blocked from implementing any rules because of court rulings. Arkansas was the only state that successfully implemented work requirements, although it only lasted about 10 months in 2018 before a court blocked the policy. In that time, nearly 18,000 state residents lost their Medicaid coverage.
Despite the court rulings, Trump’s CMS Administrator Seema Verma continued to promote the work requirements as a way to encourage ingenuity and flexibility among states to best serve their individual residents. Verma said that opponents want “to manipulate Medicaid into the prototype of a single-minded, single-payer nirvana — a utopia of open-ended government-run health care,” in a 2019 speech to state Medicaid directors. “Part of my mission is to fight such underhanded tactics and preserve the right of states to shape your programs in ways that are consistent with the needs of your residents, your cultures and your values. Anything less stifles innovation.”
Conservative groups like The Heritage Foundation, have long argued that work requirements would help the poor by offering them a way out of poverty. Doug Badger, a Heritage Foundation visiting fellow in domestic policy studies, wrote that Medicaid and other welfare programs should be a “bridge for non-aged, non-disabled adults, not a destination.” Badger also cited research indicating that the “hidden cost” of staying on Medicaid could be up to $323,000 in foregone lifetime wages for men and up to $212,000 in lost lifetime wages for women. Thus, encouraging low-income individuals to work more could “significantly improve living standards.”
Opponents of work requirements have pointed to research that shows that the majority of Medicaid-eligible adults work if they can and that many of those individuals work in low-wage industries that are less likely to offer employer-sponsored health insurance coverage. Many Medicaid enrollees also work in industries that suffered restrictions and disruptions during the COVID-19 pandemic, resulting in job losses or reduced work hours.
“The fundamental truth is that work requirements, no matter how you structure them, are legally suspect and cannot be fixed,” wrote David Machledt, senior policy analyst in the National Health Law Program. “Low-income families already have plenty of incentive to make a living without adding an illegitimate and ill-conceived Medicaid work requirement.”
The medical community warned that work requirements could threaten the health of vulnerable populations. “Imposing work requirements, lock-outs, premiums and other out-of-pocket costs limit access to preventative and primary care services and inhibit Medicaid beneficiaries from seeking care that helps them avoid costlier health conditions and maintain wellness,” the American Academy of Family Physicians wrote in a statement opposing the requirements. The group added that work requirements could “create unacceptable barriers to care.”
In fall 2020, the U.S. Supreme Court announced that it would take up the issue of Medicaid work requirements and is scheduled to hold oral arguments this spring. If the Biden administration is able to rescind the work requirements, however, a Supreme Court decision would be irrelevant.
For more background, see the March 2016 issue of Congressional Digest on “Obamacare Update.”
