Medicaid and Work: How the CMS Administrator Has it Completely Upside Down

Work has a lot going for it. It allows people to support themselves and their families, it is a source of self-esteem, and — in a safe and non-predatory workplace — it is good for one’s health and well-being.  In fact, encouraging work is one of the reasons that the Medicaid program is so important to families as well as to people with disabilities.

In the case of people with disabilities, Medicaid has a number of eligibility pathways, known collectively as “Medicaid Buy-In” that are designed to eliminate the disincentive to go to work or increase hours or wages. What’s the disincentive? Because Medicaid is for low-income Americans, it by definition has limits on the amount of income an individual can have and still qualify. Medicaid Buy-In programs, which have been around for more than 25 years, let people with disabilities work and earn more than they would otherwise be allowed to earn and still qualify for coverage. Without Medicaid Buy-In, earning more than these income limits would result in a loss of Medicaid and the services and supports it pays for, making it difficult — if not impossible — for many of these working disabled individuals to continue working. As the CMS Medicaid website notes, “Ideally, [Medicaid Buy-In] means workers with disabilities do not need to choose between healthcare and work.”

In the case of parents and other adults without disabilities, Medicaid offers Transitional Medical Assistance (TMA) to encourage parents with dependent children receiving cash assistance under Temporary Assistance for Needy Families (TANF) program to take a job or increase their hours. The TMA provision, which will have its 30th anniversary next year, requires states to extend Medicaid coverage for at least 6 months ( and as much as 12 months) to a parent or caretaker relative who loses TANF benefits due to increased wages or hours of work. In this instance, Congress has viewed Medicaid as a tool for encouraging individuals to move from welfare to work.

In both cases, the Medicaid statute is designed to encourage work by reducing the disincentive of losing Medicaid coverage due to increased hours or income from employment. The statute does NOT require any applicant or beneficiary – whether adults with disabilities or those without – to work as a condition of Medicaid eligibility. If a state, under its TANF program, terminates cash assistance due to an individual’s refusal to work, it may also, as part of this sanction, terminate the individual’s Medicaid coverage. But the state has no authority to terminate Medicaid coverage for individuals who are not being sanctioned under TANF, because Medicaid, unlike TANF, is a health insurance program, not a cash assistance program.  

In a recent policy address to state Medicaid directors, CMS Administrator Seema Verma conflated statutory work incentives with non-statutory, non-existent work requirements:

For people living with disabilities, CMS has long believed that meaningful work is essential to their economic self-sufficiency, self-esteem, wellbeing and improving their health. Why would we not believe that the same is true for working age, able-bodied Medicaid enrollees?… We owe our fellow citizens more than just giving them a Medicaid card, we owe a card with care, and more importantly a card with hope. … Hope that they can one day break the chains of generational poverty and no longer need public assistance … We will approve proposals that accomplish this goal.1

Put another way, because Medicaid makes it possible for people with disabilities to work and earn more income than they could otherwise have and still retain coverage, CMS will allow states to require adults without disabilities to work as a condition of receiving any Medicaid coverage at all, regardless of how little income they have.

This reasoning can best be understood in the context of the moral code of 16th Century England. Continued coverage for the “deserving” working disabled; loss of coverage for “undeserving” “able-bodied.” This moral conviction appears to be fervently held. It is not, however, supported by either the evidence or the Medicaid statute.

Let’s start with the evidence. Listening to the Administrator’s remarks, one might think that no Medicaid beneficiaries (other than a few individuals) with disabilities work. As it happens, most non-disabled adults with Medicaid coverage work. According to a Kaiser Family Foundation analysis of the Current Population Survey, of the 24 million non-elderly adults enrolled in Medicaid in 2015 who do not receive SSI, nearly 60 percent worked (41 percent full-time and 15 percent part-time). Many of the working beneficiaries were employed in small businesses and industries that tend not to offer affordable health insurance to their low-wage workers, making their Medicaid coverage crucial.  

It’s worth looking at the real-world circumstances of the “able-bodied.” To determine what role Medicaid played in the family budgets of beneficiaries, Kaiser researchers interviewed 18 adults in five states, three of which had taken up the Medicaid non-expansion (VA, KS, TN) and 2 that had not (OR, and NM).  Of the 18, 14 could be considered “able-bodied,” at least in Elizabethan terms. All but 2 of these 14 was working full-time or part-time; one was recently unemployed and searching for a new job, and the other was taking care of a son with behavioral health problems.  

Looking at their family budgets, it’s pretty obvious, at least to this 21st Century mind, that these Medicaid beneficiaries have a very strong economic incentive to work: brutal need. It’s also clear that Medicaid is not a “set of chains” to be cast aside but rather a life raft for them and their families, one that allows them to access needed services without going further into debt or deeper into poverty. It should come as no surprise, therefore, that the research shows that Medicaid helps families keep themselves out of poverty, as my colleague Karina Wagnerman has explained.

There is no evidence that work requirements will help the “able-bodied” improve their circumstances. But there’s good reason to think that they will make matters worse. Research on work requirements in cash assistance programs found that the large majority of individuals subject to work requirements remained poor, and some became poorer.  And, as my colleague Joan Alker and Susan Wikle from CLASP explain, work requirements are likely to reduce Medicaid enrollment through red tape and are unlikely to result in individuals finding employment with affordable insurance. This is among the many reasons that the Medicaid statute, over its more than 50 year history, has never contained a work requirement for Medicaid eligibility and has never authorized the Secretary to allow states to impose one.  

Administrator Verma has it completely upside-down. In 16th Century England, 100 percent of the population was uninsured, and the “able-bodied” were sent to the Workhouse. In 21st Century America, about 90 percent of non-elderly Americans are insured (Medicaid insures about one quarter of those).  

And in 21st Century America, low-income individuals – “able bodied” and otherwise – should not have to choose between healthcare and work.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.