Research & Commentary: Arizona Seeks Medicaid Waiver to Install Work Requirements

Published December 15, 2017

Medicaid expansion has placed a severe financial strain on the budgets of the states that chose to expand under the provisions instituted by the Affordable Care Act (ACA). One area of Medicaid reform that many states are beginning to consider is the creation of work requirements for Medicaid beneficiaries. Implementing work requirements is a proven way to ensure recipients take a step toward self-sufficiency rather than become permanently dependent on government aid. Several states, including Arizona, Arkansas, Florida, Indiana, Kentucky, Maine, and Ohio, are in the process of crafting or submitting waivers from the Centers for Medicare and Medicaid Services (CMS) for Medicaid overhauls that would include work requirements.

In 2016, Arizona received approval from the Obama administration for several changes to its Medicaid program, including important cost-sharing reforms such as co-pays and premiums. Unfortunately, the work requirement reforms and proposed time limits were rejected. In December, Arizona Gov. Doug Ducey (R) will resubmit a modified Medicaid waiver calling for work requirements and scaled back time limits.

Ducey’s proposed waiver would require enrollees to work on average 20 hours per week, be enrolled in school full time or part time, or participate in a job-search and training program. The waiver would also create a five-year time limit for able-bodied Medicaid recipients who refuse to enter the workforce or a training program.

In The Heartland Institute’s 2015 Welfare Reform Report Card, the authors argue encouraging work affects more than just household income: “Research has shown that requiring work as a condition of receiving cash welfare isn’t something the system does to someone, but rather something done for someone.”

One example of successful work requirement reform is Kansas’ recent inclusion of work requirements in its welfare system. In a report from the Foundation for Government Accountability (FGA), Nic Horton and Jonathan Ingram examined Kansas’ welfare reforms and found they caused individuals to reenter the labor force. They also determined the incomes of Kansas families exiting the Temporary Assistance for Needy Families program (TANF) increased substantially, more than doubling in the first year.

According to the FGA study, as of 2017, families who left TANF are now earning $48 million more per year than they had while receiving cash assistance. The new incomes of those leaving the welfare system increased 104 percent in one year, $20 million more than they had while on welfare. Four years after the reforms, these same individuals’ incomes had increased by 247 percent.

State lawmakers waiting for the federal government to pass its own health care reforms should instead apply for waivers from the U.S. Department of Health and Human Services, giving states more control over their Medicaid programs. Unlike in previous years, when nearly all waivers adding competitive reforms to Medicaid were rejected under the Obama administration, the current administration has stated it will approve reform-minded Medicaid changes.

Implementing Medicaid work requirements would be a good first step for Medicaid-expansion and non-expansion states toward helping to limit the rising costs of Medicaid.

The following documents examine Medicaid reform in greater detail.

Work Requirements Are Working for Kansas Families: How Welfare Reform Increases Incomes and Improves Lives
In this study, Nic Horton and Jonathan Ingram of the Foundation for Government Accountability examine Kansas’ welfare reforms and how recipients fared after leaving the program. Their results found the reforms have led to more employment, higher incomes, and less dependency on government services.

The Power of Work: How Kansas’ Welfare Reform is Lifting Americans out of Poverty
In this study published by the Foundation for Government Accountability, Nic Horton and Jonathan Ingram examine Kansas’ welfare reforms and the effect they have had on food stamp enrollment. “With no welfare work requirement or time limit, just one in five able-bodied adults on food stamps worked. Nearly 93 percent of them were in poverty, most in severe poverty. Since implementing work requirements and time limits, the number of able-bodied adults on food stamps has dropped by 75 percent,” the authors wrote.

Research & Commentary: States Pursue Work Requirements for Medicaid–commentary-states-pursue-work-requirements-for-medicaid?source=policybot
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines efforts by several states to add work requirements to their Medicaid programs. “Implementing Medicaid work requirements would be a good first step for Medicaid-expansion and non-expansion states toward helping to limit the rising costs of Medicaid,” Glans wrote.

Kentucky Seeks Stricter Medicaid Work Requirements
Nathaniel Weixel of The Hill examines Kentucky’s new efforts to reform its Medicaid program. Kentucky lawmakers have asked the Centers for Medicare and Medicaid Service for permission to impose stricter work requirements for Medicaid beneficiaries. The new waiver request updates a previous request to overhaul the state’s Medicaid program.

Research & Commentary: Why Arkansas’ Medicaid Rollback Could Be a Model for Expansion States–commentary-why-arkansas-medicaid-rollback-could-be-a-model-for-expansion-states?source=policybot
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines Arkansas’ rollback of its Medicaid expansion program and discusses how other states could follow its lead. “States that have not expanded should avoid doing so, but for states that have expanded Medicaid, Arkansas’ reforms could be a good model for limiting the growth and cost of Medicaid expansion. Other states should take advantage of the waiver process while there is an administration in the White House willing to approve reform-minded Medicaid changes,” wrote Glans.

The Value of Introducing Work Requirements to Medicaid
Ben Gitis and Tara O’Neill Hayes of the American Action Forum examine the value of work requirements and argue more work requirements are needed in other safety-net programs, including in Medicaid.

Poverty After Welfare Reform
In this Manhattan Institute study, Scott Winship examines the effect of the welfare reforms implemented in the 1990s on poverty: “Deep child poverty was as low in 2014 as it had been since at least 1979 after including refundable tax credits and noncash benefits (other than health coverage) in income, counting household heads’ cohabiting partners as family, and applying the best cost-of-living adjustment to the poverty line. Adding health benefits indicates that deep child poverty was lower by 0.3 percentage points in 2014 than in 1996, and lower than any other year going back to 1979,” wrote Winship.

The Personal Health Care Safety Net Medicaid Fix
This article by Justin Haskins, Michael Hamilton, and S.T. Karnick of The Heartland Institute outlines a proposed reform plan for Medicaid, the Personal Health Care Safety Net Medicaid Fix. The authors say their Medicaid Fix would expand patient choice and give each Medicaid enrollee real money, not false promises, in the form of a personal safety net that would empower even the poorest of families to take care of itself and give more than 70 million Americans access to the private health insurance market.

The Oregon Experiment—Effects of Medicaid on Clinical Outcomes–effects-of-medicaid-on-clinical-outcomes?source=policybot
This article from The New England Journal of Medicine examines Medicaid outcomes in Oregon. Oregon gave researchers the opportunity to study the effects of being enrolled in Medicaid (compared to being uninsured) based on data from a randomized controlled trial, the “gold standard” of scientific research. The results showed no improvement in health for enrollees, but it did reveal better financial protections for patients and increased medical spending.

Why States Should Not Expand Medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington, DC greater control over spending to better fit coverage expansion to states’ needs, resources, and budgets.

Welfare Reform Report Card: A State-by-State Analysis of Anti-Poverty Performance and Welfare Reform Policies
In 2015, The Heartland Institute published an updated version of its Welfare Reform Report Card. This report card compiles extensive data on five “inputs” and five “outputs” of state welfare and anti-poverty programs and assigns a final grade to each state for its welfare policies.

Welfare Rules Database 
The Urban Institute’s Welfare Rules Database provides a “comprehensive, sophisticated resource for comparing cash assistance programs between states” and for researching changes in cash assistance rules between states.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database. 

If you have any questions about this issue or The Heartland Institute’s website, contact John Nothdurft, The Heartland Institute’s government relations director, at [email protected] or 312/377-4000.