Medicaid work requirements will kick millions off coverage without much savings

As more states look to implement work requirements for the Medicaid program, millions of people could be in jeopardy of losing their healthcare coverage if they cannot comply. Even if some Medicaid beneficiaries lose their coverage, the savings to the federal program could be minimal, according to a pair of recent studies published in JAMA Internal Medicine.

Medicaid work requirements could disenroll 2.8 percent of enrollees, or about 2.1 million people, according to one study. This population only accounts for approximately 0.7 percent of Medicaid spending nationally, found one study from Harvard researchers.

So far, 11 states have applied for work requirement waivers, with four being approved. The waivers require that certain Medicaid beneficiaries in Kentucky, Indiana, Arkansas and New Hampshire must work, look for work or volunteer to maintain their eligibility for the federal program. The policy in Kentucky, however, has been met with resistance, and a federal judge blocked the policy from going into effect.

Kentucky Governor Matt Bevin previously stated the state will see a 16 percent reduction in Medicare spending by excluding “able-bodied” adults from enrollment, the study cited. However, the real savings are likely to be far less.

“Results of our analysis indicate that savings to Medicaid would be minimal if exemptions were precisely applied,” study author Anna Goldman, MD, et al. wrote. However, the savings from a “spillover effect” as a result of loss of coverage could be higher.

“If spillover loss of coverage is the primary mechanism by which work requirements decrease Medicaid enrollment and spending, these savings would likely come at substantial cost in terms of human health,” Goldman et. al wrote.

Those at risk of disenrollment are also more vulnerable, with the average annual income of $3,829, according to the study. Forty-two percent of this group are also of black or Hispanic race/ethnicity, 18.6 percent have children younger than 18, 26.6 percent have hypertension, 33.7 percent have depression/anxiety and 31 percent report an activity limitation.

Small potatoes

While savings are likely to be minimal, implementing the requirements will also prove to be costly and not effect a majority of beneficiaries.

“The small proportion of persons subject to the requirements may cause some to wonder why some states are pushing so hard to institute these policies, especially given that states would have to bear the administrative costs of implementing work requirements,” an article accompanying the studies reads.

In Virginia, the cost of the program is expected to be in the tens of millions of dollars, according to a fiscal analysis.

Among these 11 states, 0.3 percent to 5.4 percent of the Medicaid population were subject to work rules but did not meet the requirements, according to the second study, which conducted a state-level analysis. Between 3.9 percent and 29.2 percent of Medicaid-eligible individuals were subject to proposed work requirements across the 11 waiver states, the study found.

“Almost all” eligible individuals already meet proposed work requirements or exemptions, the state-level analysis found.

Furthermore, more beneficiaries are likely to be disenrolled as a result of not completing the “extensive documentation” rather than meeting the actual requirements.

Despite these minimal impacts to Medicare savings, the Trump administration continues to support work requirements and will review state waivers.

“In striking down the Kentucky work requirement, the judge noted that it was unclear how the rule would promote health coverage, the goal of the Medicaid program,” the article concludes. “As with an inappropriate prescription or other iatrogenesis in the clinical setting, Medicaid work requirements represent a case of policy making gone astray, causing more harm than good.”