Research & Commentary: Idaho Should Enact Medicaid Work Requirements to Keep the Program for those Truly in Need

Published March 12, 2019

As in many states, Idaho’s Medicaid program costs are increasing unsustainably. In 2015, Idaho spent 27.6 percent of its budget on Medicaid, a 4.6 percent increase from 2010, according to Ballotpedia. In fiscal year 2017, federal and state spending for Idaho’s Medicaid program totaled approximately $1.8 billion, according to the Kaiser Family Foundation.

Despite growing concerns about the soaring costs of similar Medicaid expansions, Idahoans voted to expand the Gem State’s program last November. The initiative will expand Medicaid coverage to an estimated 91,000 adults. However, before it is officially enacted, the state legislature must decide how to fund and implement the expanded program. A bill introduced in early March would make several major changes to Idaho’s Medicaid program.

First, the bill would add a 20 hour per week work requirement for Medicaid expansion enrollees, similar to the one for food stamp recipients. The bill includes an exemption for parents of children under 18. Work requirements for able-bodied adults without dependents are vital for states to ensure the long-term viability of Medicaid. Work requirements also help people move from government dependence to self-sufficiency. A well-paying job is the best way for people to lead happy, healthy, and productive lives.

Opponents of work requirements claim they force people off Medicaid without reliable access to health care. However, the majority of individuals who leave Medicaid subsequently enroll in a private, employer-sponsored insurance plan, which offers better benefits. In fact, medical care benefits were available to “69 percent of private industry workers and 89 percent of state and local government workers in March 2018,” according to the U.S. Bureau of Labor Statistics.

The bill’s second major reform would nullify Medicaid expansion if the federal government funds less than 90 percent of Medicaid expansion costs. Contrary to expansion supporters’ depiction of the new federal funds as “free money,” Medicaid expansion is expensive. It creates new costs the federal government doesn’t cover or won’t cover forever, leaving state taxpayers on the hook for new liabilities.

The third major change would require Idaho to write and submit a Medicaid waiver to the federal government to allow people making from 100 to 138 percent of the poverty level to purchase private insurance through the Your Health Idaho state exchange rather than through Medicaid. To fund these plans, Idaho would request Medicaid expansion dollars from the federal government.

The bill’s fourth major reform addresses mental health funding by requiring Idaho to apply for a waiver seeking federal approval allowing Medicaid to pay for inpatient psychiatric treatment.

Idaho’s Medicaid expansion proposal is similar to the failed model used in Arkansas, which was the originator of the premium-assistance model that many states used to expand their Medicaid programs. In 2017, as Medicaid expansion became too costly, Arkansas was the first state to significantly reform Medicaid expansion. In Arkansas, Medicaid expansion costs grew far more than initially expected. Initial estimates predicted an expansion population of approximately 215,000 individuals, but by 2016 the expansion had ballooned to more than 325,000 people.

The Arkansas rollback asked for permission to shrink eligibility for the expanded Medicaid program from 138 percent of the federal poverty level (FPL) to 100 percent of FPL. The reduced eligibility standards are expected to shrink state Medicaid rolls by 60,000 people, or approximately 20 percent of the total Medicaid expansion enrollment. In a statement on Arkansas’ Medicaid rollback, Americans for Prosperity argued the reform “is a good step towards bringing the program closer to its originally intended beneficiary group, and ensuring that limited state and federal dollars are flowing to the Arkansans who need it most.”

In short, 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 should be to provide temporary or supplemental assistance while encouraging work and independence. Although the Arkansas-style premium assistance program contained in the bill should be avoided, the work requirements, nullification threshold, and mental health reforms are all good policies that should be pursued.

The following documents examine Medicaid reform and expansion in greater detail.

Real Work Requirements and a Sunset Needed for Medicaid Expansion
Wayne Hoffman of the Idaho Freedom Foundation argues that Medicaid expansion should not pass in Idaho without major modifications. “Before they drop a dollar into Medicaid expansion, lawmakers need to pass legislation that keeps Medicaid expansion from inflicting unlimited amounts of damage. A bill that contains actual, meaningful work requirements and requires the Legislature to reauthorize the program in a few years is the best way to balance what voters unwittingly asked for with protection for taxpayers and state programs likely to suffer when, not if, Medicaid expansion begins fiscally careening off the rails,” wrote Hoffman.

The Arizona Medicaid Expansion Experience: Beware the Peddlers of Cost-Shifting Claims
This study, written by Naomi Lopez Bauman, Angela Erickson and Christina Sandefur examines the effects of Medicaid expansion on health care costs and whether it has cut down on the high cost-sharing borne by the insured. The study concludes expansion increased the burden on the privately insured. “The Arizona experience is a cautionary tale for lawmakers: A program should be evaluated based on outcomes, not intentions. Arizona’s expansion not only failed to deliver on its promise to alleviate supposed cost burdens on private payers, it exacerbated them.

The Report Every State Legislator Should Read
In this article published by National Review, Chris Jacobs writes about a new report issued by the Congressional Budget Office that analyzes profit margins for hospitals over the coming decade. It concludes Medicaid expansion will not make a material difference in hospitals’ overall viability.

Evidence Is Mounting: The Affordable Care Act Has Worsened Medicaid’s Structural Problems
In this Mercatus Center paper, Brian Blase examines the effect of the Affordable Care Act on Medicaid. Blase’s findings reveal Medicaid expansion has worsened many of the structural problems in the program. “The unanticipated expense casts doubt on the value of the ACA Medicaid expansion. The enhanced federal match incentivizes states to boost ACA expansion enrollment and to categorize Medicaid enrollees as ACA expansion enrollees, and also encourages states to set high fees for ser­vices commonly used by expansion enrollees and high payment rates for insurers participating in states’ Medicaid managed care programs,” wrote Blase.

Research & Commentary: States Pursue Work Requirements for Medicaid–commentary-states-pursue-work-requirements-for-medicaid?source=policybot
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.

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.

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.

Don’t Wait for Congress to Fix Health Care
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, an option the Trump administration has encouraged.

Maine Food Stamp Work Requirement Cuts Non-Parent Caseload by 80 Percent
Robert Rector, Rachel Sheffield, and Kevin Dayaratna of The Heritage Foundation examine Maine’s food stamp reforms and discuss how they could act as a model for other states. “The Maine food stamp work requirement is sound public policy. Government should aid those in need, but welfare should not be a one-way handout. Able-bodied, nonelderly adults who receive cash, food, or housing assistance from the government should be required to work or prepare for work as a condition of receiving aid. Giving welfare to those who refuse to take steps to help themselves is unfair to taxpayers and fosters a harmful dependence among beneficiaries,” the authors wrote.

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.

The Work Versus Welfare Tradeoff: 2013
The Cato Institute estimates the value of the full package of welfare benefits available to a typical recipient in each of the 50 states and the District of Columbia. The study found welfare benefits outpace the income most recipients can expect to earn from an entry-level job, and the income gap between welfare and work may actually have grown worse in recent years.

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 Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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