Specifically, the guidance said that based on its authority under Medicaid, CMS would allow states to require that non-elderly, non-pregnant adults (able-bodied adults) work as a condition to their eligibility for Medicaid. CMS asserted that the work requirement would further Medicaid's objectives by promoting better mental, physical, and emotional health and help individuals and families rise out of poverty and attain independence. Although these are admirable goals, the work requirement arguably violates the objectives of the Medicaid Act and will not promote better health, lift people out of poverty, or help able-bodied adults attain independence.
Medicaid requires States with monetary support from the federal government to "furnish (1) medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services, and (2) rehabilitation and other services to help such families and individuals attain or retain capability for independence or self-care[.]"
In its guidance, CMS cites the language of independence as support for the work requirement but some argue that, based on the statutory context, this means physical functioning. Even if the language is found to support the need for individual independence, Medicaid requires States to provide services to help families and individuals attain independence. Yet in the guidance, CMS shifts this responsibility to able-bodied adults. This is counter to the plain language of Medicaid, which focuses on states' responsibilities, not the responsibility of individuals who qualify for Medicaid. However, in its guidance, CMS prohibits states from using Medicaid dollars to able-bodied adults in meeting the work requirements.
Although, based on the language of Section 1115, CMS can waive compliance of the requirements of Medicaid, such as providing services to help families and individuals attain independence, to enable a state to carry out an experimental, pilot, or demonstration project that would promote the Medicaid's objectives, some argue that CMS cannot add requirements to Medicaid, such as working, without Congress providing additional authority.
Under former President Barack Obama, CMS allowed states to expand Medicaid coverage to able-bodied adults and implement voluntary work training programs. As a result of this expansion, a Kaiser Family Foundation literature review showed that Medicaid's expansion positively affected access to health care, utilization of services, the affordability of care, the financial security among the low-income population, and it led to reductions in the cost of uncompensated care for hospitals and clinics.
In the past, courts have invalidated waivers that required work requirements because they did not meet the objectives of the statute. In this case the work requirement does not meet the objective of Medicaid, which is to provide health care for poor people. According to the Heritage Foundation and the Kaiser Family Foundation, the Medicaid work requirement will make it harder for able-bodied adults to register for Medicaid, limiting access to health care necessary to keep them well enough to work, and may increase health care costs because these adults will seek care in the emergency room instead of seeking routine care.
Moreover, there is no evidence that the work requirement will fulfill the objectives CMS lists in the guidance: promote better health, help individuals and families rise out of poverty, or able-bodied adults attain independence. According to the Chetty study cited in the CMS guidance, higher income was correlated with greater life expectancy throughout the nation, but there was significant state variation. For instance, in the ten states (Michigan, Ohio, Indiana, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas) with the lowest life expectancy for low-income individuals there was a significant association with healthy behaviors, not unemployment rates, i.e. working. This is significant because many of these states are seeking Medicaid waivers to require work requirements based on the theory that working promotes better health. The lack of evidence correlating employment to better health is further illustrated by the fact that the guidance says this hypothesis, i.e. that work requirements will improve the health of able-bodied adults on Medicaid, should be proven by states, who have no expertise in conducting health benefits research, without financial or program development assistance from CMS.
Additionally, the work requirement will not lift people out of poverty. A recent University of Berkeley report found that by 2013, US manufacturing workers made 7.7% below the median wage for all occupations, causing 1 of 3 manufacturing workers to go on welfare and almost 1 million manufacturing workers and their families to enroll in Medicaid/CHIP (equal to 15% of all manufacturing workers). Thus, obtaining employment does not guarantee that an individual or their families will rise out of poverty.
Nevertheless, CMS notes in the guidance that in the past many states have had successes with voluntary work programs linked to Medicaid. Yet, CMS does not cite any specific state program that has been successful in lifting people out of poverty or making them independent.
In fact, states that implemented a work requirement for recipients on the Temporary Assistance for Needy Families (TANF) did not show long-term success in cutting poverty or increasing long-term employment because states did not provide substantial job support such as training, education, and placement. The result of the TANF work requirement was to remove many recipients from the program, causing them to sink further into severe poverty, after which many states stopped tracking the requirement because they did not have sufficient money in their budgets to fund the tracking.
The problems with the Medicaid work requirement are further illustrated by Kentucky's "Helping to Engage and Achieve Long Term Health (HEALTH)" Medicaid waiver, which was approved on January 12, 2018 and is being challenged in federal court. First, although the waiver requires able-bodied adults to complete 80 hours of community engagement in a 30-day period or state-approved health literacy or financial literacy course to be eligible for Medicaid, it fails to include any information about the state efforts to support unemployed able-bodied adults in meeting the requirements.
Second, in the CMS guidance, applications for waivers allowing work requirements were required to include information about how the state would address market forces and structural barriers to work, such as high unemployment. This information was not included in the approved Kentucky waiver and it is unclear how Kentucky, with the 4th highest percentage of people in poverty out of 50 states, is going to be able to address market forces and structural barriers to work for unemployed able-bodied adults. Hence, arguably CMS violated its own rules by approving a waiver that did not fulfill the requirements of the guidance.
If CMS wants to fulfill Medicaid's objective of lifting people out of poverty and helping able-bodied adults attain independence, then CMS should require states to provide support for Medicaid beneficiaries that would make them independent. Specifically, CMS has the authority and should require states to provide Medicaid beneficiaries with:
1. Voluntary job training that is show to result in long-term full-time work;
2. Subsidized work wages until the job provides a living wage;
3. Subsidized transportation to job training and work; and
4. Subsidized or free childcare.
Some of these measures are already being discussed by states, such as Montana and Pennsylvania, to support families and able-bodied adults on Medicaid in becoming independent.
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