4 things to know about Michigan’s Medicaid work requirements

June 15--WASHINGTON -- So hundreds of thousands of low-income Medicaid recipients in Michigan are now going to have to find work or face losing their health insurance? As always with government, the issue is more complicated than that.

From a lawsuit that could stop Michigan's new Medicaid work requirement dead in its tracks as soon as the end of June to reports that the percentage of people not already in compliance may be far smaller than estimates, any analyses and predictions should be taken in stride. And while there's no doubt that some people could struggle under the new requirement, there are other indications that without it, some states might roll back coverage altogether that has been extended in recent years to include hundreds of thousands of more low-income people.

Here are four things to remember when talking about Michigan's new 80-hours-a month work requirement:

The legal landscape

First, to be clear, Michigan's Legislature did not pass a bill that requires all Medicaid recipients to work. It passed a bill that asks the federal government to let it, as of Jan. 1, 2020, require able-bodied adult Medicaid recipients under the Healthy Michigan plan -- those with incomes between the federal poverty level and the cutoff income that is 33% above that (for an individual, that would be currently between $12,140 and $16,146 annually; for a family of four, between $25,100 and $33,383) -- to work, look for work, volunteer or be in training or in school, for 80 hours each month, unless they are otherwise exempt, or risk losing their benefits.

There is no guarantee the federal Centers for Medicare & Medicare Services (CMS) will grant the permission -- known as a waiver -- to allow this, though President Donald Trump's administration earlier this year signaled it would be more open to considering work requirements for certain Medicaid enrollees. Since then, it has granted waivers to four states to launch "demonstration projects" to see how these requirements might work -- Arkansas, Kentucky, Indiana and New Hampshire. Eight other states -- Arizona, Kansas, Maine, Mississippi, North Carolina, Ohio, Utah and Wisconsin -- have applications pending. Michigan's is unlikely to be submitted until this fall and will have to get in line, along with those from Virginia and South Dakota, which also are contemplating waivers.

But Michigan also enters the fray at an uncertain time: Several Kentucky residents, as well as the National Health Law Program and the Southern Poverty Law Center, have sued, arguing that CMS's waiver to Kentucky -- for a work program set to begin July 1 -- violates the law limiting Medicaid projects to those advancing the objectives of the program, which is to extend access, not limit it. And earlier administrations have said outright that work requirements didn't pass that test. A judge in the District of Columbia Circuit Court on Friday heard arguments in the case and said he expects to issue a ruling by June 30. And if he blocks the program, that decision could apply to any other state looking to enact such a program.

Eliot Fishman, health policy director at Families USA, a health care advocacy group, said the judge "seemed sympathetic" to the argument that work requirements don't necessarily advance the objective of providing medical assistance. But the Trump administration has argued it has the authority to allow the work requirements and the State of Kentucky has counter-sued. Whatever happens, it's likely the legal questions surrounding this will be up in the air, maybe for years.

How many would be affected

The prospect of work requirements for Medicaid recipients in more than a dozen states has many advocates for poor people up in arms, saying millions could have their health care jeopardized. Roughly 15 million people are believed to have received coverage under the Medicaid expansion authorized under the Affordable Care Act -- otherwise known as Obamacare -- and there are even a handful of states asking for permission to apply work and other requirements to more traditional Medicaid populations. The proposals being made by the states and how many hours people could be required to work vary widely. If these rules were to spread across that population, it might have wide-ranging effects involving millions of beneficiaries.

In Michigan, fiscal analysts estimate that as many as half of the 670,000 or so people on the Healthy Michigan program might fall under work requirements. Exemptions would be available for recipients who are under 18, over 62, pregnant, full-time students, on long-term disability, caretakers of children under 6, or incapacitated or disabled individuals or those who could show "good cause." But officials are far from certain about those numbers because while it's not difficult to determine whether a recipient is a student or on government disability, there is also an exemption for the "medically frail," who could potentially qualify with a doctor's note that they have a physical, medical or mental disorder, or have a substance abuse problem or a developmental disability. Said Steve Angelotti, the analyst who did the report on the bill for the Senate Fiscal Agency, "The real challenge is figuring out how many people (fall under) the exemptions."

But then, even among those able-bodied adults who would have to meet the work requirement, there are questions about how many of them are already working: In a report this week, the nonpartisan Kaiser Family Foundation -- which researches health policy issues -- reported that six in every 10 Medicaid enrollees are already working (in many cases other programs like food and cash assistance already require it) and that once you add in those in school, disabled, medically unable to work or not working because of caregiving, it only leaves about 6% of the Medicaid population that could be targeted by work requirements.

At the same time, the same report also notes that many Medicaid adults don't have computer access or email and could have trouble verifying their work, leading to gaps in their coverage; others could be limited in their ability to understand the requirements they're being asked to report, leading to mistakes that could take months to rectify, and still others may be in seasonal or part-time work with hours that fluctuate wildly throughout the year.

"You're talking about a very narrow slice of people but the states will need to develop an infrastructure (to verify work or exemptions) for the entire population," said Robin Rudowitz, associate director for the Program on Medicaid and the Uninsured at the Kaiser Family Foundation. "You have individuals who might fall through the cracks even though they remain eligible for coverage."

Lessons from other states

Whatever Michigan does, its experiment with work requirements almost certainly will be informed by the lessons learned in other states where similar restrictions have been put in place. That includes the four states that already have been approved to have work requirements.

But only one of those four -- Arkansas -- has put its requirement in place, as of June 1, having sent out notices to recipients in recent months and ramping up job service centers to help process people who need to find work. And in 2018, the requirement only applies to able-bodied adults 30-49 and no more than about 40,000 people statewide will have to report an exemption or their work qualifications. Even for that group, the requirement is being phased in with only about 11,000 people required to report by July 5. But recipients will still keep their coverage until they've been found to be out of compliance for three months, at which time they'll lose their Medicaid coverage for the rest of the calendar year.

"With any program that's this large and has never been done before, there's going to be some bumps along the way," said Amy Webb, communications chief for the Arkansas Department of Human Services. "We're prepared to work with those."

As for Kentucky, the program could potentially affect some 200,000 people, according to state estimates. But it's not set to go into effect until July -- barring a court order to the contrary -- and even when it does, it's expected to be phased in one county at a time for the first several months, then adding new regions of the state every month through the rest of the year.

Kentucky officials have been sending out notices and having some public forums in advance of the rollout -- including some information about job searching, volunteering and training -- but some advocates say it hasn't been enough. Emily Beauregard, executive director at Kentucky Voices for Health, said. "There's some awareness that Medicaid is changing ... but almost no one knows the extent to which benefits and coverage will change or how drastically these changes will impact themselves, their family members or their community."

As for how Michigan would roll out such a requirement and inform people of the change, it's anyone's guess at present.

The political reality

For all the harm and potential confusion that may be created by work requirements in Michigan and elsewhere, it's clear that they're being motivated, in part, by political considerations.

Those political considerations -- including conservative concerns and public attitudes about spending on social programs -- must be dealt with, one way or another, in many right-leaning states and state legislatures, if there is going to be new or continued Medicaid expansion programs.

For instance, Utah finally signed off on a Medicaid expansion plan this year that could provide coverage to about 70,000 people -- but only if CMS agrees to its request that a work requirement be put in place and the federal government commits to paying for 90% of the costs of the program (it pays a bit more than that now, though it's supposed to phase down to that level by 2020). Frederick Isasi, executive director of Families USA -- which has argued against work requirements and says they are more about cutting Medicaid than putting people to work -- likened such demands to holding low-income families "hostage" for coverage, saying the requirements are "being demanded by conservative legislators in exchange for Medicaid expansion."

A similar situation appears to be playing out in Virginia, where supporters believe they may finally have votes for Medicaid expansion -- but only if it includes work requirements. Meanwhile, in other states -- including Michigan -- legislators may be looking at the requirements and other restrictions as a trade-off to keeping the program: In the bill passed last week, Michigan -- separate from the work requirements -- also said CMS must approve new requirements for people who remain on Healthy Michigan for more than four years, increasing their premiums and requiring them to meet tougher health goals, or it said it would terminate the program for everyone.

With Medicaid consuming a large portion of state budgets -- as high as 20% nationally -- "it's more than important to make sure it has political support and sustainability," said Matt Salo, executive director of the National Association of Medicaid Directors.

And that's true, he said, even if it subjects only a small number of people to finding work. "That symbolism," he said, "is important from a political sustainability viewpoint."

Contact Todd Spangler: 703-854-8947 or tspangler@freepress.com. Follow him on Twitter at @tsspangler.

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