Today the Centers for Medicare and Medicaid Services (CMS) issued guidance that radically alters Medicaid by allowing states to link Medicaid eligibility with work requirements.

Essentially, the Secretary of Health and Human Services will allow states, using Section 1115 Medicaid demonstration waivers, to condition Medicaid eligibility on compliance with state-determined policies that require non-disabled adults to work or engage in work-related activities. I expect a number of waiver approvals to follow shortly – Kentucky is widely expected to be the first, with Indiana and Arkansas likely coming soon.

We knew the guidance was coming, but nonetheless it was jarring to see it on paper. The new policy is an unprecedented and dangerous break with Medicaid’s history as a critical source of needed health coverage for the nation’s most vulnerable families. This dramatic change to Medicaid will have the effect of adding more red-tape, creating more barriers to coverage and lead to the loss of coverage for very poor parents and other adults. Children will be harmed in the process.

The policy guidance does nothing to ensure that the most vulnerable children and families are protected. The proposals from states that we have seen tend to exempt parents of children younger than six, but not always, and CMS does not set any federal parameters on parents of young children, merely noting that states may wish to consider exempting them. Nor does it permit use of federal funds to provide the support that parents would need to work, such as affordable childcare.

As regular readers of “Say Ahhh!” know, there are many reasons why taking away coverage from parents harms children, as well. The most obvious one is that a healthy parent is a better parent – and conditions that are very common among very low-income mothers (like depression) improve when the parent has Medicaid. A second reason is that when any member of a family is uninsured, the likelihood of medical debt and even bankruptcy increases exponentially – and this undermines the economic security of the whole family. And finally, research shows that when parents are covered, their children are more likely to be covered as well.

The guidance claims that working will make people healthier and cites research that shows those who work have fewer health needs. But this argument is a specious one – confusing correlation with causality. Evidence from the Ohio and Michigan Medicaid expansions show the reverse. Those who got coverage through the expansion of Medicaid in these two states said health coverage made it easier for them to work.

Work requirements are misguided for many reasons but one key reason is that the majority of adults, close to 80 percent of adult Medicaid beneficiaries, are living in a working household. I won’t belabor this point since many others have made it, but it speaks to the misguided focus of energy and attention from the Trump Administration and the cynical political motivations behind this policy. This guidance, and the waiver approvals that will soon follow, are the first major foray into the Medicaid space by the Trump Administration now that legislative efforts to cut and cap the program have abated.

There are many other directions they could have gone. For example, they could have followed up on promises to try to reduce drug costs for the Medicaid program.

And let’s be clear – this policy and others that will be approved soon (such as locking out participants for failure to redetermine their eligibility etc.) will result in people losing their Medicaid coverage. As I have written, the Kentucky waiver documents themselves project that 100,000 people will lose coverage after that waiver is approved.

There were a other lowlights that popped out at me while I read the guidance:

• The guidance’s explicit link to TANF work requirements suggests to me that CMS will approve pending waiver proposals such as the one from the state of Kansas (Mississippi is coming in shortly; South Dakota and Alabama recently announced they will pursue such a waiver as well). These states have not expanded Medicaid and are seeking to apply the work requirement only to extremely poor parents living in the deepest poverty. These parents (so-called “Section 1931”) are a mandatory coverage group in Medicaid. As I blogged about before, these parents are already experiencing extraordinary hardship, and the proposals contemplate a world in which parents will no longer have Medicaid coverage either because they lose it for alleged failure to comply with the new requirements or if their income increases even slightly.
• The budget neutrality discussion in the guidance suggests to me that key issues such as how many people are likely to lose coverage and what the administrative costs are of these new approaches will be obscured. The guidance states that the savings from reducing coverage may not be counted towards achieving budget neutrality. On the one hand, this could be viewed as a positive since it may reduce the incentive to cut people off. But in reality, states rarely have trouble meeting budget neutrality targets, and I fear that this may facilitate state efforts to obscure the real impacts of their policies. Moreover, the administrative costs of these new policies are likely to be very high yet, as is the norm in budget neutrality assessments, they won’t be included. If the Trump Administration was looking for fiscal responsibility here, they would change this practice.

Work is a laudable goal but this policy won’t achieve it – in fact, it will likely have the opposite effect. You won’t hear much (if anything) about parents and children from the Trump Administration as they promote this policy and start approving harmful waivers, or governors in states that start implementing them, but make no mistake – they have much to lose here. Will this draconian new Medicaid policy start a race to the bottom among states seeking to cut parents off health coverage?

Related Content: Comments on Federal Regulations: Medicaid and CHIP Waivers