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Coronavirus Crisis Stirs Fresh Debate Over Medicaid Work Rules

April 21, 2020, 9:31 AM

Supporters of Medicaid work requirements are building their defenses as the coronavirus takes its toll on the economy, even though such rules have consistently failed to survive in court.

Four states now have seen their requirements that Medicaid enrollees find work struck down, Bloomberg Law data show. Several states have voluntarily dropped or suspended requirements. Utah is the only state that’s suspended its rules because of the pandemic.

Critics expect the push for work requirements won’t resurface anytime soon, given the public health emergency and the hostile reception requirements have gotten in the courts. But supporters, looking to the fiscal crisis that’s likely to follow the Covid-19 crisis, argue that mandating employment as a condition of eligibility is critical to restarting the economy once the pandemic is over. What’s more, states will be grappling with the higher costs of Medicaid programs that were expanded to help fight the virus, some policy analysts say.

“When the health crisis has begun to recede, the states are going to be left with declining revenues and soaring Medicaid rolls, and they’ll be looking for every tool they can find to get Medicaid under control,” said Jonathan Ingram, vice president of policy and research at the Foundation for Government Accountability.

“Work requirements will be needed at that time as a way of refocusing the programs on the truly needy,” he said.

Legal Landscape

The Centers for Medicare & Medicaid Services has pushed for state work requirements as a way to help improve health outcomes and quality of life for Medicaid enrollees.

But the U.S. District Court for the District of Columbia has ruled four times—in challenges to the requirements in Arkansas, Kentucky, Michigan, and New Hampshire—that the secretary of Health and Human Services didn’t adequately consider whether the programs would advance the statutory purpose of Medicaid, which is to extend health-care coverage to the poor.

On appeal, the U.S. Court of Appeals for the District of Columbia rejected the Trump administration’s bid to restore the work requirement in Arkansas. A similar district court challenge to work requirements in Indiana is pending, but has been stayed due to the pandemic. The case against Michigan has also been stayed because of the crisis.

No state work requirements are currently active—they’ve been rejected in court, suspended, or have yet to be implemented. Arizona suspended its work requirements last fall pending resolution of litigation in other states, and Utah suspended its work requirements in early April due to the coronavirus.

“Work requirements as a policy idea was already on life support before coronavirus hit us, but now it has been extinguished for the foreseeable future,” said Joan Alker, a research professor at Georgetown University’s Health Policy Institute.

A number of states are still awaiting approval of their requirements from the CMS. Those states include Alabama, Mississippi, Oklahoma, South Dakota, Tennessee, Montana, Idaho, Nebraska, and Georgia.

Finding Work

Proponents say requiring Medicaid enrollees to find work will help states maintain control of their Medicaid programs once the pandemic ends by encouraging able-bodied adults to find work and move off the Medicaid rolls into private insurance.

Critics counter that the coronavirus crisis has exposed a false assumption, built into work requirements, that jobs are always there to be had.

“Expecting people who have lost their jobs to find work in the midst of a recession isn’t rational,” said Nicole Huberfeld, a professor of health law at Boston University’s School of Law. “And pretending it is rational is just a way of concealing the true purpose of the policy, which is to disenroll people from Medicaid.”

Work requirements also get the relationship between health-care coverage and participation in the workforce backwards, Huberfeld said.

“Study after study show that people are more likely to get work and keep work if they have health coverage,” she said. “Having insurance under Medicaid is a net positive for society, and this is even more true during a crisis like we’re in right now.”

Relaxed Requirements

The CMS has required states to consider creating exemptions and “additional mitigation strategies” to prevent work requirements from becoming an unreasonable burden in the face of high unemployment rates. Some states, in their work requirement proposals, have already included provisions to relax requirements at times of high unemployment, according to advocacy and policy groups that support work requirements.

Supporters also reject the idea that such requirements constitute a barrier to Medicaid eligibility. Working, looking for work, and going to school are well within the abilities of the able-bodied adults and are a necessary part of their return to productive, self-sufficient lives, they say.

“It’s easy to demonize work requirements until you look at all the safeguards and exceptions that are built into them,” said Charlie Owens, state director of the National Federation of Independent Business in Michigan.

Rea Hederman, vice president of policy at the Buckeye Institute, which has backed work requirement proposals in Ohio, said that the requirements will become “increasingly useful” after the public health crisis is over.

“Work requirements obviously aren’t an active policy tool in the middle of an economic downturn, although the community-engagement aspects of these proposals, the volunteering and schooling and so forth, remain relevant,” Hederman said.

To avoid appearing “tone deaf,” work requirement proponents will likely go quiet during the crisis, said Lindsay Killen, vice president at the Mackinac Center, which has supported work requirements in Michigan. But they will resume making the case in the aftermath, when bills come due and the need to restart the economy, and get people working, takes center stage.

“Work requirements will be an important tool in the toolbox,” she said.

To contact the reporter on this story: Christopher Brown in St. Louis at ChrisBrown@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com

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