Center on Budget & Policy Priorities: 'States' Experiences Confirm Harmful Effects of Medicaid Work Requirements'

WASHINGTON, Nov. 19 -- The Center on Budget and Policy Priorities issued the following report entitled "States' Experiences Confirm Harmful Effects of Medicaid Work Requirements" by Jennifer Wagner, director of medicaid eligibility and enrollment, and senior policy analyst Jessica Schubel:

Beginning in 2018, the Trump Administration encouraged states to adopt policies taking Medicaid coverage away from people not meeting work requirements. While 12 states received approval for these policies, several were blocked by the courts, and none are currently in effect. But data from Arkansas' ten-month implementation of its policy and brief implementation in Michigan and New Hampshire provide direct evidence of these policies' harmful effects.

* A large fraction of people subject to the policies lost coverage or were at risk of losing coverage. In Arkansas, more than 18,000 people -- nearly 1 in 4 of those subject to work requirements -- lost coverage over the course of just seven months. In New Hampshire, almost 17,000 people, or about 40 percent of those subject to work requirements, would have lost coverage had state policymakers not put the policy on hold. Some 80,000 Michiganders -- nearly 1 in 3 of those subject to work requirements -- were in danger of losing coverage had a court not stopped the policy.

* In all three states, evidence suggests that people who were working and people with serious health needs who should have been eligible for exemptions lost coverage or were at risk of losing coverage due to red tape. Large numbers of beneficiaries in both states reported that they didn't know about the work requirement or whether it applied to them. It's likely that people with disabilities were particularly at risk.

* Taking coverage away from people not meeting work requirements also increases financial hardship and reduces access to care. A survey of people with low incomes in Arkansas and neighboring states showed that the people who lost coverage because of Arkansas' work requirements experienced adverse consequences, including having problems paying off medical debt and delaying care or forgoing medications because of cost.

* Arkansas' work requirement increased uninsured rates without increasing employment, studies by Harvard researchers found. In both an initial and a follow-up survey of people with low incomes in Arkansas and neighboring states, researchers found evidence that Arkansas's policy increased uninsured rates: people who lost Medicaid did not transition to other coverage. The researchers found no evidence that it increased employment.

Work Requirement Policies in Arkansas, Michigan, and New Hampshire

In January 2018, the Trump Administration began approving state work requirements in Medicaid, which the federal government had never previously permitted. Between June 2018 and March 2019, Arkansas, the first state to implement a work requirement, required some enrollees in the Affordable Care Act's (ACA) Medicaid expansion to document that they worked or engaged in work-related activities (e.g., job training or volunteer work) for at least 80 hours per month, unless they reported that they qualified for limited exemptions. In June 2019, New Hampshire began implementing its work requirement, requiring all expansion enrollees to work or engage in work-related activities for 100 hours each month or obtain an exemption. And in January 2020, Michigan began implementing its work requirement, requiring all expansion enrollees to work or engage in work-related activities for 80 hours each month or obtain an exemption.

In March 2019, a federal district court vacated the Department of Health and Human Services' (HHS) approval of Arkansas' work requirement policy (and a similar waiver in Kentucky, which had not yet been implemented), thereby preventing Arkansas from continuing to implement it. In February 2020, a federal appeals court upheld this decision, which the Trump Administration is now appealing to the Supreme Court. New Hampshire voluntarily suspended its work requirement in July 2019. A few weeks later, the same federal district court vacated HHS' approval of New Hampshire's policy, and in March 2020, it vacated HHS' approval of Michigan's work requirement policy as well.

Arkansas is the only state to have taken coverage away from people for not meeting work requirements, but Michigan and New Hampshire did not pause their requirements until they were on the brink of doing so. Thus, all three states' experiences provide important information about who loses coverage and why as a result of these policies.

The Trump Administration has approved similar policies in other states, but due to court decisions, voluntary moratoriums states have adopted, and federal protections put in place during the pandemic, none of the others have been implemented (at least to date).

Data Show Work Requirements Lead to Large Coverage Losses

In Arkansas, over 18,000 beneficiaries, or about a quarter of those subject to the work requirement, lost coverage over the first seven months of implementation.[1]

In New Hampshire, almost 17,000 beneficiaries, or about 40 percent of those subject to the work requirement, were set to lose Medicaid before the state suspended the requirement.[2]

In Michigan, some 80,000 beneficiaries, or about one-third of those subject to the work requirement, were set to lose coverage before the court vacated the state's work requirement policy.[3]

These coverage losses are even higher than the 6 to 17 percent coverage loss that Kaiser Family Foundation researchers forecasted could result from implementing work requirements nationwide.[4]

A study by Harvard researchers found that the uninsured rate among low-income Arkansans aged 30-49 -- the group potentially subject to work requirements -- rose from 10.5 percent in 2016 to 14.5 percent in 2018, after the work requirement took effect. There was no similar increase for low-income Arkansans of other ages or for low-income people aged 30-49 in other, similar states.[5]

This finding refutes claims, for example from HHS Secretary Alex Azar, that most people leaving Medicaid due to the policy did so because they found jobs with health insurance.[6]

Number Losing Coverage Exceeded Policy's Supposed Target Population: Beneficiaries Not Working or Eligible for Exemptions

About 3 or 4 percent of those subject to the Arkansas work requirement were not working and did not qualify for exemptions, studies estimate.[7]

Yet each month, 8 to 29 percent of those subject to the requirement failed to report hours or reported insufficient work hours. In fact, over 75 percent of those required to report hours (that is, those not automatically exempted by the state) failed to do so each month.[8]

Likewise, a study estimates that all but a small minority of Medicaid expansion beneficiaries in New Hampshire were either working or ill or disabled (and therefore should have qualified for exemptions), yet 40 percent of those subject to the work requirement were set to lose coverage had the state not put the policy on hold.[9]

News accounts corroborate that eligible beneficiaries in Arkansas lost coverage and were at risk of losing coverage in New Hampshire. For example, one working Arkansas beneficiary with a chronic condition explained that he lost Medicaid and then could not afford medications, which in turn caused him to lose his job due to his deteriorating health. Another reported rationing her medication after failing to navigate the reporting requirement and losing coverage, despite working 25 to 35 hours each week -- which equates to well over the state's monthly minimum requirement.[10]

And a New Hampshire woman described her struggle to obtain a "medical frailty" exemption, which failed because her primary care doctor and neurosurgeon each insisted that the other should fill out the necessary paperwork.[11]

Beneficiaries Faced Many Challenges Complying

Evidence from Arkansas, Michigan, and New Hampshire confirms earlier research on work requirements showing that red tape and paperwork requirements create serious hurdles for eligible beneficiaries, which then cause enrollment to decline.[12] Examples include:

* Complex and confusing rules. Nearly half the population subject to Arkansas' work requirement reported that they were unsure whether it applied to them, while another third said they had heard nothing about it, the Harvard researchers' study found.[13]

In New Hampshire, many beneficiaries reportedly didn't know about the work requirement or received confusing and often contradictory notices about whether they were subject to it.[14]

Some Arkansas beneficiaries apparently believed, incorrectly, they could maintain their coverage by reporting work hours just once, rather than every month. Also, some beneficiaries reported over 80 hours of job search each month, twice the number they are allowed to count toward the work requirement; they likely thought they were complying as they diligently looked for work and reported their hours but were not actually complying with the rigid policy. In a follow-up study conducted several months after the court halted the state's work requirement, Harvard researchers found that even as of late 2019, knowledge of the state's work requirement policy was still poor, with 70 percent of Arkansas residents unsure whether the policy was still in effect.[15]

* Insufficient and ineffective outreach. Arkansas conducted much of its outreach through social media and online videos, which failed to reach the many people without access to computers or the internet. The state (along with health plans, providers, and advocates) also conducted other outreach efforts to educate beneficiaries about the new work requirement, but these efforts failed to reach many enrollees, often due to inaccurate phone numbers in case files.[16]

New Hampshire attempted a more comprehensive outreach effort, undertaking multiple activities such as mail notifications, town halls, phone calls, and text messages, at significant expense. But officials acknowledged that "these considerable efforts" were ineffective.[17]

For example, on only 500 of the state's 50,000 phone calls did a state official discuss the work requirement with the person who would be affected by it, and the state's 2,011 home visits reached only 270 people who would be affected.[18]

Michigan spent a considerable amount of state money on a major, but ineffective, effort to help beneficiaries comply with the new policy. Despite spending $28 million on implementation and outreach activities before the work requirement took effect in January 2020 -- with an additional $40 million worth of activities planned through the end of year -- some 80,000 Michiganders were set to lose coverage before the work requirement policy was halted.[19]

* Complex reporting systems. Many rightly criticized Arkansas' decision to initially restrict reporting to an online portal. More than 20 percent of Arkansas beneficiaries lack internet access and another 20 percent have no broadband access.[20]

In addition, Arkansas' web portal was unavailable after 9 p.m. and before 7 a.m. each day, was not mobile-friendly, was not accessible for those with certain disabilities, and required a complex login procedure. Participants in an Urban Institute-run focus group said that setting up an account proved extremely difficult.[21]

While Arkansas later added a phone reporting option, that did not eliminate the hurdles for eligible beneficiaries.[22] Some, for example, reported waiting on hold for 45 minutes to an hour, after which they were sometimes hung up on.[23]

New Hampshire beneficiaries also experienced online reporting problems. Just days before the reporting deadline, the state's online system experienced a glitch that created problems for people trying to report their work hours.[24]

* Lack of staff support. None of the states hired additional staff to answer questions, and, at least in Arkansas, there were no accommodations for individuals with disabilities. Arkansas Human Services Director Cindy Gillespie justified the lack of additional staff by saying, "If you implement [work requirements] in the old-fashioned way of 'Come into our county office,' we would have to hire so many people -- and that just doesn't make sense."[25]

But Arkansas' failure to invest in staff and other resources to support enrollees who should be exempt or need help complying with the requirements created a bureaucratic maze that caused many eligible enrollees to lose coverage.

Work Requirements Endanger People With Disabilities

When the Centers for Medicare & Medicaid Services (CMS), in announcing the Administration's support for Medicaid work requirements, notified states that the policies must comply with the Americans with Disabilities Act, we and others warned that protecting people with disabilities would prove impossible without extensive efforts.[26]

Indeed, Arkansas didn't adequately explain beneficiaries' rights under the Act, and it lacked a comprehensive system for providing reasonable modifications to protect people with disabilities, such as modifying the hourly requirement or providing support to help people meet the reporting requirement.[27]

Due to the lack of protections and the design of the work requirement itself, individuals with disabilities lost coverage and may face serious harm as a result. In fact, "people with disabilities were particularly vulnerable to losing coverage under the Arkansas work and reporting requirements, despite remaining eligible," a Kaiser Family Foundation study concluded.[28]

Losing coverage is especially harmful to people with disabilities who rely on regular care to manage their conditions. Coverage interruptions and subsequent gaps in care can lead to increased emergency room visits, hospitalizations, and admissions to mental health facilities.[29]

In addition, the financial risk from medical expenses and debt is high for people with disabilities, who are already at greater risk of homelessness; additional financial hardship could make it harder for some people with disabilities to afford other necessities like housing and food, which could contribute to bankruptcy or homelessness and further jeopardize their health.

Arkansas' Work Requirement Increased Financial Insecurity and Reduced Access to Care

Individuals in Arkansas who lost coverage during 2018 experienced significant adverse consequences, the Harvard researchers found, including greater financial insecurity. Nearly half of those who lost coverage reported having serious problems paying off medical debt. Individuals also experienced reduced access to care with 56 percent delaying needed care because of cost and 64 percent delaying taking medications because of cost.[30]

These rates are significantly higher than among those who maintained their Medicaid or marketplace coverage.

Focus groups with Arkansas beneficiaries also found that people losing Medicaid lost access to needed health care. Among focus groups of participants who lost Medicaid, the majority did not learn that their coverage had been terminated until they sought care or tried to fill a prescription. "I went to pick up my prescription and they said I couldn't get it," one beneficiary recounted. "It was a big shock. At first, I was upset and then I was worried because I need my medicine. I shouldn't find out the day I need my medicine." Another said, "I have to have my medication because I am epileptic, and I take three different seizure medicines. If I don't take it, I can't work. . . . I had to be stable and if I was not stable I was going to lose my job."[31]

Focus groups in New Hampshire told a similar story: many participants said that they would have to go without needed care and medications. One said, "What am I going to do? This [health coverage] is how I survive." Another beneficiary recounted, "I had one medicine that, without insurance, costs 150 bucks a month. And would probably cost my life if I couldn't get it." And one beneficiary simply decided to forgo needed care because he knew he was not going to meet the hours requirement for June 2019 and thought he no longer had coverage (even though he did).[32]

Data Don't Show Employment Gains Due to Work Requirements

The Harvard researchers' studies cited above found no evidence that the work requirement policy increased employment, number of hours worked, or overall rates of community engagement activities (such as volunteering).[33] Employment rates for low-income Arkansas residents aged 30-49 (those potentially subject to work requirements) did not meaningfully increase after the policy took effect, nor did they increase relative to employment rates for older low-income Arkansas residents or low-income younger people in neighboring states.

What's more, nearly all of the beneficiaries who met Arkansas' requirement by working were automatically deemed compliant because they were already working before the rules took effect or because they complied with work requirements already in place under SNAP (formerly food stamps). Only the group that had to report hours each month faced any new work incentive due to the policy. And of that group, only a few hundred each month met the requirement by reporting sufficient work hours, the state reports -- putting an upper bound on the number of people who could have found jobs because of the work requirement.[34]

Moreover, most of these people would likely have found jobs regardless: low-income people move in and out of jobs frequently under any circumstances.

These data are consistent with focus group interviews showing that the Arkansas work requirement didn't change most beneficiaries' behavior. Beneficiaries already had enough reasons to work: they needed to pay their bills. But they often struggled with unstable work hours, lived in rural areas with few jobs, or faced other barriers to employment -- and the state didn't invest any new money in job training programs, services to address barriers, or supports like transportation to help beneficiaries connect to jobs.[35]

The Arkansas data are also consistent with evidence that work requirements in other federal programs have had limited effects on employment.[36]

Arkansas', Michigan's, and New Hampshire's experiences should serve as a warning to other states about the human toll of taking coverage away from people who can't meet rigid work requirements. No matter how they're implemented, work requirements have harmful and unintended consequences -- most notably, taking coverage away from people who are already working or should be exempt. These fundamentally flawed policies can't be fixed.[37]

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REPORT and ENDNOTES: https://www.cbpp.org/health/states-experiences-confirm-harmful-effects-of-medicaid-work-requirements