Research & Commentary: Alabama Considers Work Requirements Waiver in Medicaid Reform Plan

Published February 16, 2018

The continuing growth in Medicaid has placed a severe financial strain on state budgets, especially in those states that expanded the program under the provisions of the Affordable Care Act. Several states – including Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah, and Wisconsin – have submitted waivers to the Centers for Medicare and Medicaid Services (CMS) to implement Medicaid overhauls that would include reforms such as work requirements and cost-sharing.

Alabama is now considering whether to join these states by submitting its own waiver requesting permission from the federal government to implement work requirements.

According to CMS, Alabama currently has about 1.043 million Medicaid enrollees. While Alabama is not one of the states that has expanded Medicaid under the Affordable Care Act, it still faces significant and rising Medicaid costs. Total Medicaid spending in Alabama grew by 33 percent between fiscal years 2012 and 2016, according to the Kaiser Family Foundation.

In January 2018, Kentucky became the first state to have a Medicaid waiver approved by CMS that includes major Medicaid reforms. One of the reforms is the creation of work requirements for able-bodied, non-pregnant adults. The waiver permits the state to require all “able-bodied working-age adult members without dependents” to meet certain work requirements, undergo job training, or perform volunteer community service to continue receiving Medicaid benefits.

Sponsored by state Sen. Arthur Orr (R- Decatur), Alabama’s Medicaid reform legislation has two main components. The first component seeks to address Medicaid fraud and abuse by requiring the state’s Medicaid program to verify the eligibility for coverage of individuals currently enrolled in the plan. The state would be able to contract with an independent third-party vendor to conduct the eligibility review. The new bill would also require a semiannual review to ensure proper eligibility for Medicaid recipients.

The second component, designed in a manner similar to provisions included in Kentucky’s waiver, authorizes the state to submit a plan amendment or waiver necessary to implement new work requirements. The original bill called for work requirements for most able-bodied adults, which would have mandated at least 20 hours of work per week or 20 volunteer hours per week, with a few exceptions for parents and certain medical conditions or illnesses. However, in the latest version of the bill, the exact details on the requirements were removed. Orr told the Birmingham Business Journal the change came at the request of Gov. Kay Ivey’s office and that the change would allow Medicaid “greater flexibility in negotiating an overall waiver for the state’s program.”

Work requirements have proven to be successful in the past when introduced in other entitlement programs. They reduce poverty by encouraging work and self-reliance. The new work requirements now being considered by other states are modeled on similar work requirements that were adopted as part of the 1996 welfare reform legislation signed into law by President Bill Clinton. In a study examining the effect of the reform, the Manhattan Institute found the inclusion of work requirements led to substantial reductions in poverty nationwide.

Medicaid should focus on encouraging able-bodied recipients who are enrolled in these programs to become more self-sufficient and less dependent on government aid. The real focus of these programs must be to provide temporary or supplemental assistance while encouraging work and independence. The waiver process gives Alabama the flexibility it needs to improve health care affordability and quality of care. Work requirements help people move from government dependency to self-sufficiency, which is what welfare programs should be designed to do and what all lawmakers should strive to achieve.

The following documents examine Medicaid reform in greater detail.

Don’t Wait for Congress to Fix Health Care…/dont-wait-for-congress-to-fix-health-care 
In this Policy Brief, Heartland Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled, even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs or submit even more ambitious requests for waivers to the Department of Health and Human Services – a suggestion the Trump administration has encouraged.

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 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.

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.


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.