REFORM- The US debt ceiling negotiations could hinge on Medicaid work requirements

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The Republican proposal to require people to work in order to receive Medicaid benefits poses an existential question about the very nature of government assistance: Do you need to do something to earn it?

For years, the GOP’s answer has been yes, some people should. These days, they have very specific people in mind: The 19 million Americans, most of them childless and nondisabled adults, who were not eligible for Medicaid until the Affordable Care Act expanded eligibility a decade ago.

House Republicans are so serious about imposing these new rules that they are trying to make them a condition of lifting the federal debt limit and averting an economic crisis. They don’t seem likely to succeed, given the Biden administration’s clear objections, but the mere demand reveals that the party remains as serious as ever about shrinking the social safety net. They seek to do so by dividing the deserving — in the case of Medicaid, pregnant women, children, those who are elderly or disabled — from the undeserving, who have to work to earn benefits.

“Assistance programs are supposed to be temporary, not permanent,” House Speaker Kevin McCarthy said in a speech on Wall Street outlining his party’s demands in the debt-limit talks. “A hand up, not a handout. A bridge to independence, not a barrier.”

Work requirements for various social programs — housing assistance, food stamps, cash welfare, and Medicaid — have been a policy goal for Republicans since the 1980s. And they have succeeded, sometimes with the help of Democrats, in imposing them. SNAP, the food-stamp program, already has work requirements, which Republicans want to expand, in spite of evidence that they do not significantly increase employment.

But Medicaid, by far the largest of these social programs, has long been the white whale for conservatives in their work requirement crusade. Twice as many people receive Medicaid benefits (about 90 million) as receive food stamps (about 42 million). Briefly, under President Donald Trump, Congress tried to implement them. But the results were disastrous and a federal judge blocked the requirements as counter to the purpose of the Medicaid program.

The entire debate rests on a core disagreement about the nature of Medicaid and, by extension, health insurance itself. Is it something you should have to work to earn, or a right to which Americans are entitled?

“In real life, what I think is most concerning is it will lead to losses of coverage, and that is not what the Medicaid program is supposed to be doing,” Cindy Mann, who oversaw Medicaid under President Barack Obama, told me about work requirements in 2018. “It’s supposed to be promoting coverage and promoting affordable coverage.”

What happened in Arkansas under Medicaid work requirements

States are required to cover some people through Medicaid, such as pregnant women and the disabled, but they also have discretion about who is eligible for the program. Some states have used that discretion to expand coverage (in California, for example, Medicaid covers many undocumented immigrants) while others have kept their eligibility requirements much more stringent.

The Affordable Care Act was a critical turning point for the program. Under the law, 40 states have expanded Medicaid eligibility to the childless, nondisabled adults living in or near poverty who historically have been excluded from the program. About 20 million Americans have been covered by Medicaid expansion in the past decade.

But that has presented an ideological problem for conservatives. The bigger Medicaid grows, the more popular and therefore difficult to cut it becomes. An effort to repeal the Affordable Care Act failed. And so, with the Trump administration in power, Medicaid work requirements became their backdoor way to try to erode the gains of Medicaid expansion.

In early 2018, the Trump health department told states they would, for the first time, approve state proposals requiring work for some Medicaid beneficiaries. Several states lined up and two — Arkansas and Kentucky — had their plans approved.

The Kentucky version of Medicaid work requirements was never implemented due to a court order. But Arkansas did succeed in becoming the first state to ever impose Medicaid work requirements, mandating that some enrollees work or perform some kind of other work-related activity for 80 hours per month — and the result was a public policy disaster.

About 250,000 people were covered by Medicaid in Arkansas at the time of the work requirement’s approval. About 65,000 people were subject to the requirement; the rest were exempt. But only about 10 percent of people who needed to report their activities to the state actually did so. Ultimately, nearly 17,000 people lost health coverage.

This had been one of the biggest fears for health advocates: that a lot of people would lose coverage not because they failed to comply but because they failed to report.

“The low level of reporting is a strong warning signal that the current process may not be structured in a way that provides individuals an opportunity to succeed, with high stakes for beneficiaries who fail,” wrote Penny Thompson, then the chair of MACPAC, which was created by Congress to make policy recommendations for Medicaid, in a review of the Arkansas plan.

Later evaluations of the Arkansas work requirement also found that the policy did not have the desired effect on employment. People fell off of the Medicaid rolls but didn’t seem to find more work.

A study published in the New England Journal of Medicine found that Medicaid enrollment had fallen for working-age adults, the uninsured rate was rising in the state, and there had been little discernible effect on employment. The authors concluded that the work requirement “was associated with significant losses in health insurance coverage in the initial six months of the policy but no significant change in employment.”

They also found that many people either were not aware of the reporting requirement or were confused by it.

The study found that one-third of respondents in the age 30-49 range, the focus of their analysis because they were most likely to be expected to meet the requirement, had not heard anything about Arkansas’s new work requirements for Medicaid. Nearly half of those people, 44 percent, said they were unsure whether the requirements applied to them. A significant number of people said a lack of internet access (32 percent) had contributed to their decision not to report their relevant information to the state.

Those findings provided support to the legal challenges to the Arkansas work requirement that ultimately brought an end to the policy. One of the plaintiffs, Adrian McGonigal, stated that he had not realized they needed to report their activities every month. He showed up at a pharmacy to fill prescriptions for two chronic health conditions and only learned then they were no longer covered by Medicaid; the bill would be $800. He couldn’t afford it, skipped his meds for a while, ended up unable to work because he was sick, and ultimately lost his job.

Citing such experiences and other evidence that work requirements were causing people to lose coverage without encouraging them to find more work, Judge James Boasberg ruled in 2019 that the proposals in Arkansas and Kentucky by the administration were “arbitrary and capricious” and ordered that the work requirements could not be allowed to remain in effect.

“Weighing the harms these persons will suffer from leaving in place a legally deficient order against the disruptions to the State’s data-collection and education efforts due to vacatur renders a clear answer: the Arkansas Works Amendments cannot stand,” Boasberg wrote to conclude his ruling.

Who stands to lose under the House Republican plan

But the experience in Arkansas and Boasberg’s ruling haven’t stopped Republicans from continuing to pursue Medicaid work requirements as part of the debt-limit negotiations with Senate Democrats and the White House.

The House’s work requirement proposal — dubbed a “community engagement” requirement in the bill’s text — would require many recipients to be working, looking for work, or participating in another kind of community service. Children under 18, adults over 56, people with mental or physical disabilities, and parents of dependent children would be exempted.

The Congressional Budget Office had previously estimated requiring nondisabled, non-elderly childless adults to work in order to receive Medicaid benefits would slash the program’s spending by $135 billion over 10 years — largely because more than 2 million people would lose coverage annually for failing to meet the work requirement.

The same fundamental problem remains: There is little evidence of a large number of Medicaid enrollees who are avoiding work to stay on the program’s rolls. One study in Michigan, released while the Trump administration was pushing work requirements, is illustrative.

The research, published in JAMA, looked at the work status of people who enrolled in Medicaid after Michigan expanded the program under Obamacare. It stood out for being based on real interviews with Medicaid enrollees, rather than on administrative data or other information.

The big-picture takeaway was that most Medicaid enrollees in Michigan were working already, unable to work, or at a point in their lives where they would not work (retired or a student). Almost three-fourths of the people in the study fell into those categories. Only 28 percent were “out of work.”

The authors broke down the “out of work” population and, rather than revealing a bunch of lazy hangers-on, they found people with real barriers to working — and who might benefit from having health insurance. Two-thirds said they had a chronic physical illness. More than a third said they had been diagnosed with a mental illness. One-quarter said they had a physical or mental condition that interfered with their ability to function at least half of the time.

Another analysis by the left-leaning Center on Budget and Policy Priorities (CBPP) examined the state proposals to require Medicaid to prove they are employed and came to a startling conclusion: Under those plans, even poorer people on Medicaid who already are working regularly might not meet the requirements and could suffer a lapse in health coverage as a result.

That’s because people working lower-wage jobs are more likely to have irregular working hours or gaps in their employment. By CBPP’s estimate, one in four people who worked enough hours over the course of a year to meet Kentucky’s proposed work requirement would still have at least one month where they fall below the state’s 80-hour monthly requirement, and could therefore be at risk of losing coverage.

Nationally, CBPP found, using census data, that two-thirds of people potentially subject to a work requirement were working, and 70 percent of those worked 1,000 hours over a year, or 80 hours a month, which would have met the Kentucky and Arkansas requirements. But nearly half of people (46 percent) who could be subject to a work requirement and were working had at least one month when they failed to clear the 80-hour bar.

In other words: A Medicaid work requirement could force working people to lose their health insurance because it isn’t structured to reflect the realities of what work looks like for them.

Lower-wage jobs tend to be more volatile, with fewer regular hours. Top industries for people who are likely to face a work requirement are food services, retail, and construction, according to CBPP — jobs that can be subject to seasonal and other shift changes.

Seven in 10 food service workers report that they work irregular hours, according to CBPP, along with 63 percent of retail workers and 54 percent of construction workers. All three industries have above-average rates of people quitting or being laid off; retail and food services have some of the shortest average job tenures.

“Approved and pending state work requirement policies are based on the assumption that people who want to work can find steady employment at regular hours,” the CBPP authors wrote. “This assumption is out of step with the realities of the low-wage labor market.”

Work requirements have also been proposed in such a way that could lead to serious racial discrimination.

During the Trump administration, Michigan lawmakers pushed a plan that would have required Medicaid recipients (with exceptions for the disabled, elderly, and a few other selected populations) to work or search for work at least 29 hours each week. If they fail to meet the work requirement, they could lose Medicaid coverage for a full year.

But the Michigan plan came with a twist: People who live in counties with unemployment rates above 8.5 percent were to be exempted from the requirement. In Michigan, the counties that meet that standard tend to be more rural, with a higher share of white residents. Meanwhile, that would likely lead in practice to rural whiter counties, where unemployment was higher, getting a break from these work requirements, while urban areas with a higher share of Black residents would still be subjected to them. That would have meant that Black Medicaid enrollees would be more likely to lose their health insurance.

George Washington University’s Sara Rosenbaum warned me at the time of “the potential for enormous discrimination, really racial redlining.” The Trump administration had explicitly said it would allow states to account for local conditions, such as high unemployment in certain areas or other factors, to provide exemptions from a work requirement.

“All of these things are potentially much harder to come by in rural areas,” Rosenbaum said. “Because of the demographics, you could have situations where the populations required to work are disproportionately African American.”

America’s complicated relationship with work and welfare

House Republicans still think they can make a winning argument in favor of Medicaid work requirements — and they aren’t necessarily delusional to think so. But the politics of work requirements are complicated and also carry a substantial downside risk for the party proposing them, as Republicans should be well aware.

The last time Republicans tried (and failed) to pass significant cuts to the Medicaid program, in the first year of the Trump presidency as part of their Affordable Care Act repeal plans, they paid the price during the 2018 midterm elections. That’s because Medicaid is popular. Over the past two decades, the health insurance program has become an increasingly crucial part of the safety net. Enrollment has roughly doubled from about 46 million people in 2007 before the Great Recession to more than 92 million today. More than 75 percent of the US public says they have very or somewhat favorable views of the program. Two-thirds say they have some kind of connection to Medicaid, either because they themselves or a loved one was enrolled.

Two polls released while the Trump administration was moving full speed ahead on Medicaid work requirements reveal the paradox of American attitudes to requiring work in order to receive government support.

The Kaiser Family Foundation (KFF), the gold standard of health policy polling, found in June 2017 that 70 percent of respondents said that they would support a work requirement. But a Center for American Progress (CAP) poll released shortly after found that 57 percent said they opposed allowing states “to deny Medicaid health coverage to recipients ages 18 to 64 who do not have a job with a certain amount of hours and do not participate in state-approved work programs.”

The wording of the questions may have played a role — and may hint at how Republicans and Democrats may frame the issue in the debate to come. KFF asked about allowing states to impose work requirements on people “in order to get health insurance through Medicaid.” CAP asked about denying people health insurance if they didn’t meet the requirements set by their state.

This disparity — a huge majority supports work requirements if you frame them one way; a solid majority opposes them if you use a different frame — is telling in the odd relationship Americans have with the social safety net.

On the one hand, Americans believe in work — Max Weber’s Protestant work ethic is crucial to understanding the US psyche for good reason. Work is treated as an inherent good. That might help explain why we collectively are so susceptible to stories about people taking advantage of Medicaid or disability insurance. As Jack Meserve wrote in Democracy in 2021 while Congress was debating another round of stimulus checks for most Americans due to the pandemic-driven economic downturn:

An insidious way that austerity has entrenched itself in the last four decades is by infusing every government program with suspicion and doubt toward the citizens it is supposed to help. That stance leaches into the populace, where soon average citizens look at their neighbors’ unemployment claims with skepticism, their fellow citizens’ need for help as an indication of sloth and greed. We now too often have a country of welfare puritans, all suffused with a haunting fear that someone, somewhere may be getting a benefit she doesn’t deserve.

But on the other hand, Americans increasingly believe in an adequate social safety net. According to the CAP poll, more than 70 percent of people said they opposed cutting home heating assistance for low-income Americans, unemployment insurance, and affordable housing programs.

Medicare and Social Security have long been third rails of American politics. In recent years, Medicaid may have joined them after Republicans proved unable to overhaul it during the Obamacare repeal debate.

So the way these issues are framed is key. Americans are okay with requiring work as a principle. But if you then explain the consequences in vivid terms, that people could be denied health insurance as a result, they’re less comfortable with it.

If the actual result is funding and enrollment cuts — and people understand that — these proposals rapidly become much less popular.