The Centers for Medicare and Medicaid Services (CMS) issued new benchmarks for states seeking permission for Medicaid work requirements.
“This guidance describes considerations for states that may be interested in pursuing demonstration projects under section 1115(a) of the Act that have the goal of creating incentives for Medicaid beneficiaries to participate in work and community engagement activities,” agency director Brian Neale wrote in a January 11 letter sent to all 50 state Medicaid directors.
Section 1115, a provision of the Social Security Act of 1935, authorizes CMS to approve state-level reforms to the program.
On January 12, CMS approved a waiver application filed by Kentucky in 2016, allowing the state’s Department for Medicaid Services to implement work requirements and collect a small monthly premium from recipients.
CMS, a federal agency within the U.S. Department of Health and Human Services, is currently reviewing applications from nine other states.
Suggesting Reform Ideas
Jane Orient, M.D., executive director of the Association of American Physicians and Surgeons and a policy advisor for The Heartland Institute, which publishes Budget & Tax News, says Medicaid work requirements help make the program fairer to everyone.
“Medicaid itself serves as a disincentive to work because the instant a person earns too much money, he loses the benefit, the equivalent of a marginal tax rate greater than 100 percent,” Orient said. “Work requirements restore a bit of fairness, and benefit people who do work, because idleness is terribly destructive.”
Increasing Medicaid spending has not resulted in better health care for low-income individuals, Orient says.
“Before Medicaid, charity hospitals and clinics were funded by local government or true voluntary charities,” Orient said. “Since Medicaid, a lot more money has gone to the system, but do needy people get more or better care?”
In addition to implementing work requirements, Orient says states should audit their Medicaid programs.
“Work requirements don’t fix the basic defects in the system: rewarding failure and punishing productivity through taxation,” Orient said. “The first priority ought to be a forensic audit of where the actual money goes. Doctors will tell you that there is tremendous waste and abuse by people who pay nothing for their care: overuse of emergency rooms, missed appointments, refusal to follow medical advice, demanding and disruptive behavior, plus onerous and costly administrative requirements.”
‘Best Path Out of Poverty’
The answer to the poverty problem is work, not welfare, labor market policy director Ben Gitis and health care policy deputy director Tara O’Neil Hayes, both of the American Action Forum, say in an email to Budget & Tax News.
“For decades, the federal government has spent hundreds of billions of dollars fighting poverty,” Gitis and Hayes said. “Yet, the federal poverty rate has remained unchanged since the 1980s. That’s because federal programs have failed to do enough to connect able-bodied people to work.
“Work is by far the best path out of poverty, and policymakers must find every opportunity in the safety net to connect low-income individuals to the labor market,” Gitis and Hayes said.
Call for More Reforms
Gitis and Hayes say CMS’ work requirement guidance is a “good start.”
“The allowability of work requirements in Medicaid provides a good start to instilling accountability in the program, but it will do little to alter its financial trajectory, which continues to worsen,” Gitis and Hayes said. “Additional reforms are still needed to put Medicaid on a sustainable path and ensure the program can continue to serve those who genuinely need it without crowding out resources for other necessary programs.”
‘Value for One’s Self-Respect’
Work requirements also help people in intangible ways, Orient says.
“There is a huge amount of work that needs to be done, and people taking benefits ought to participate in it,” Orient said. “There is value for one’s self-respect in doing something. One gains skills and human contacts, even from volunteer work.”
Gitis and Hayes say work requirements also create accountability for entitlement spending.
“It is always important to ensure that taxpayer dollars are being spent wisely, efficiently, and appropriately,” Gitis and Hayes said. “Work requirements help ensure that Medicaid funding does not discourage beneficial activity. Moreover, work requirements would make the taxpayer-funded social safety net more accountable to the goal of reducing poverty.”