If you want a summary of why Medicaid work requirements are a bad idea, look no further than this document filed in federal court.

As part of the court case challenging the Medicaid work requirements proposed by the Bevin administration, an amicus brief (PDF) was filed on behalf of 43 deans, associate deans, chairs, and scholars from medical and public policy schools across the country. The table of contents of the brief (which is well worth reading in its entirety) summarizes the three primary issues with the proposed Bevin/Kentucky Medicaid work requirements:

  • They don’t meet the purpose of a Section 1115 demonstration waiver.
  • Because Kentucky has made strong gains in coverage and health due to Medicaid expansion, the negative impact of these Medicaid work requirements will be even worse.
  • The proposed program will have a major spillover effect on the rest of the state, affecting access to healthcare even for persons not on Medicaid. (And also, a substantial negative economic impact.)

Some background on Section 1115 Medicaid waivers

The basis for the proposed work requirements program comes from a section of the Medicaid law, Section 1115. This section allows states to apply for a waiver from normal Medicaid procedures and rules, in order to run experimental programs to see if a certain change can result in some sort of improvement: improved health, cost savings, efficiencies, and so on.

Thus, an approved Section 1115 waiver leads to a program change, and that program change leads to a “demonstration,” wherein the state shows the results of the experimental program. If the results are positive, and if the rationale seems sound, then the Centers for Medicare and Medicaid Services (CMS) will either allow other states to try it, or adopt it for the entire program.

There is language in the Medicaid law that is clear that states cannot use a 1115 waiver to cut costs alone, or to throw people off the rolls.

Outline of the amicus brief’s arguments

What follows is taken almost verbatim from the table of content of the amicus brief on the Medicaid work requirements, which is publicly available. Our thanks to Edward T. Waters of Feldesman, Tucker, Leifer, and Fidell for posting the document online, and to Bill Sklar of Sklar and Associates for pointing it to us through our Tips email address.

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The purpose of Section 1115 Medicaid demonstrations is to improve the program, not cull the rolls.

  1. Congress enacted Section 1115 to permit states to test new approaches to expand access, provide better services, and strengthen social programs.
  2. Early Section 1115 demonstration programs heeded congressional intent that waivers strengthen Medicaid and other social programs.
  3. Since 1965, Congress has added important protections to ensure demonstration programs promote Medicaid’s purpose.
  4. The record shows KY HEALTH approval was arbitrary, capricious, and contrary to federal law: Section 1115 demonstration programs cannot be a pretext to restrict Medicaid eligibility or coverage.
    1. CMS’ new Section 1115 policy contradicts consistent agency views that work requirements have no place in Medicaid and that demonstrations must test program improvement innovations.
    2. Extensive commentary in the administrative record made clear the risks created by work requirements and other eligibility and coverage restrictions.
    3. CMS misrepresented the research on which it claims to rest its approval of KY HEALTH.
    4. KY HEALTH lacks the requisite experimental soundness for a valid Section 1115 demonstration.

Kentucky’s remarkable Medicaid achievements make the impact of this demonstration even more catastrophic on beneficiaries.

  1. Contrary to the Commonwealth’s estimates of somewhat gradual coverage declines over five years that CMS accepted, KY HEALTH is likely to remove at least twice as many beneficiaries in the first year while barring initial enrollment for countless others.
  2. KY HEALTH places most nonelderly adults and even working beneficiaries and those exempt from the new requirements at risk of Medicaid loss.
  3. There is no realistic expectation that those leaving Medicaid for work will find alternative sources of health insurance following loss of Medicaid coverage.

KY HEALTH will produce a major spillover impact, affecting access to health care communitywide.

(Editor’s note: There are no sub-bullets under this heading in the outline, so we are pulling certain assertions from the brief itself to flesh out this heading.)

  • Communities with high levels of uninsured persons lack critical services even for insured people, because essential market conditions for health care to exist simply are not present.
  • Kentucky’s Medicaid expansion produced major health system gains, for example, in the form of reduced levels of uncompensated hospital care; reversing these gains will produce real adverse consequences for the entire population.
  • (Looking just at community health centers)
    • Applying the data on enrollment loss cited previously, researchers project that 14% to 24% of health center Medicaid patients – between 28,900 and 49,200 beneficiaries – will lose coverage in the first year alone.
    • This decline translates into approximately $22 million to $37 million in lost revenue, leading to an estimated decline of between 400 and 700 lost staff in just the community health centers.
    • This loss results in a reduction in capacity of 60,000 to 102,000 patients served, nearly 25% of current capacity.
  • These declines will affect health care access for entire communities, and understate the impact of KY HEALTH since they do not account for declines linked to premium increases and reporting requirements.
  • Nor do they take into account that tens of thousands of Medicaid beneficiaries will need to obtain “medically frail” assessments to maintain eligibility or coverage and that this new burden will fall on health centers given they are the main source of medical services in many communities.
  • (And from a footnote) Reversing Kentucky’s Medicaid gains likely will carry major economic and employment consequences; one expert estimates that by 2021, when the work requirements are fully in effect, Kentucky could forgo nearly $700 million annually in federal funding, which in turn would have major implications for the health care industry.

Summary: Medicaid work requirements are bad policy

As these points make abundantly clear, the Bevin proposal to add work requirements and reporting requirements and financial literacy requirements and volunteering requirements to the Medicaid program will cause tens of thousands of Kentucky citizens to lose health coverage. It will cost the state tens of thousands of dollars, and its ripple effects throughout the rest of the state’s healthcare systems and economy will cause more thousands to lose access to care and will cause the state to lose millions of dollars.

Are there ways to improve the Medicaid program? Are there ways to make Kentucky a more healthy state? Are there ways to incentivize people to take more responsibility for their health, and to get healthier? Certainly, the answer is Yes to all those questions.

But the proposed Section 1115 Medicaid waiver is not the answer to any of those questions. It is a bad policy, and should be scrapped.

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Bruce Maples
Bruce Maples has been involved in politics and activism since 2004, when he became active in the Kerry Kentucky movement. He has been President, Vice-President, and Treasurer of the Metro Democratic Club, and has served on the Democratic Party Executive Committee in Louisville. He began blogging in 2004, and currently operates two personal blogs (BruceMaples.com and brucewriter.com). He founded Forward Kentucky in the wake of the state elections in 2015, and expanded it in the summer of 2016. He has lived in Louisville since 1992 with his wife and two sons.