Research & Commentary: Michigan Considers Work Requirements for Medicaid

Published April 3, 2018

The continuing growth in states’ Medicaid programs 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 (ACA). Several states have sent waiver applications to the federal Centers for Medicare and Medicaid Services (CMS) to implement Medicaid reforms such as work requirements and cost-sharing. To date, CMS has approved Medicaid waivers for Arkansas, Indiana, and Kentucky.

The success of these Medicaid waiver applications has encouraged some lawmakers in Michigan to also consider submitting a waiver petition requesting permission from CMS to implement Medicaid work requirements. A new bill, proposed by state Sen. Mike Shirkey (R-Clarklake) Pregnant adults, people with medical disabilities, caretakers, students, and others would be exempted from the requirements. Further, if unemployment reaches 8.5 percent in a region, a person could meet the state’s work requirements by actively seeking employment.

Allowing those actively seeking employment to fulfill work requirements is not new; it is similar to the standard used in the federal food stamp program, and it was also included in the guidelines for Medicaid waivers sent to state Medicaid directors by the Centers for Medicare and Medicaid Services in January 2018.

As in many states, the cost of Michigan’s Medicaid program has been increasing at an unsustainable pace. Michigan’s Medicaid spending increased by a total of about 35.5 percent between fiscal years 2012 and 2016. During the 2016 fiscal year, combined federal and state spending for Medicaid in Michigan totaled approximately $16.9 billion, according to the Kaiser Family Foundation.

Since Medicaid eligibility was expanded under the Affordable Care Act in 2013, more than 680,000 lower-income residents have enrolled in Healthy Michigan, the state’s expanded Medicaid program – a figure that’s much greater than the original projection of 470,000. Thanks in large part to Medicaid expansion, more than 2 million people are now enrolled in Michigan’s Medicaid program and thus dependent on government for their health insurance.

Work requirements for able-bodied recipients have been proven to help improve self-sufficiency and limit government dependency, and thy are also popular with the public. Sixty-four percent of American adults think childless, able-bodied adults in their state should be required to work as a condition for receiving Medicaid, and just 22 percent disagree, with 14 percent not sure, according to a recent Rasmussen Reports national telephone and online survey.

Work requirements have been successful in other entitlement programs. They reduce poverty by encouraging work and self-reliance. The work requirements now being considered by other states are modeled on work requirements 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.

The Medicaid waiver process offers Michigan the flexibility to improve health care affordability and quality of care if approved. Work requirements help to move people 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
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.

New Medicaid Policy Allows State Diversity
Trent England argues Oklahoma should take advantage of the Trump Administration’s call for Medicaid work requirement waivers and present a waiver to HHS that gives the state the improved flexibility it needs.

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.

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.

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.

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 Lindsey Stroud, a government relations manager at The Heartland Institute, at [email protected] or 312/377-4000.