As regular readers of SayAhhh! know, on January 11^th CMS released guidance announcing its interest in approving state proposals to impose work requirements on Medicaid beneficiaries. Since then CMS has approved three waivers to do so (along with other important and harmful changes such as lockouts which we are not talking about today) – Kentucky, Indiana, and Arkansas. It is worth noting that all three of these states have accepted ACA Medicaid funding to expand their program to adults below 138% of the federal poverty line. CMS has yet to respond to a request to impose a work requirement from a state like Alabama that has not expanded Medicaid under the ACA – and that is the topic of the report we released today. In states that have not expanded Medicaid, these proposals will negatively impact families with children only – and those families with children are some of the most vulnerable in the country with extremely low incomes.

A few other states have similar requests pending – most notably Mississippi – but also Kansas and Maine though for a variety of reasons these waivers may not move forward in their current form. In my view, Alabama and Mississippi are the states to watch on this issue. Alabama’s proposal is currently up for public comment at the state level until April 2^nd – Mississippi’s has already been submitted to the federal government and the comment period is done. As such, the federal government could render a decision on this issue at any time.

Alabama seeks to do two things:

1. Impose a work or community service requirement on parents with incomes at or below 18% of FPL – these are families whose income is no more than $312 a month for a family of three. Parents of children under 6 years old merely have a lower burden of hours (20 per week) as opposed to parents of older children who must work 35 hours a week. There are vague exemptions for parents caring for a disabled person or parents of young children when appropriate childcare is not available.
2. Rollback Transitional Medicaid (TMA) benefits from 12 months to 6 months essentially pulling the rug out from under parents just as they are getting back on their feet.

When you unpack the two pieces of the proposal it is clear that this is not about encouraging very poor parents to work nor is it likely to succeed in that regard. There are no new resources identified to address barriers to employment like child care, job training or transportation. The practical effect of Alabama’s proposal is quite clearly to take away Medicaid coverage from very poor parents.

This is true for two reasons – because Alabama’s eligibility threshold for parents is so low the work requirement creates a Catch 22 where a parent who complies will earn too much to be eligible for Medicaid anymore and one who doesn’t will be sanctioned and lose coverage that way. The second part of the proposal limiting TMA takes away Medicaid coverage from parents who see their incomes go up because they are working more – the very behavior the proposal says the state wants to encourage. Many if not most of these parents who lose Medicaid are likely to become uninsured because the prevalence of employer sponsored insurance in Alabama for low wage workers is very low – less than a quarter of adults in Alabama with earned income below the poverty line have ESI.

These realities suggest that Alabama’s proposal is not a serious effort to help families get on their feet but rather an effort to cut enrollment and score some cheap political points. An analysis of the state’s own budget neutrality spreadsheets suggest a coverage loss of approximately 8,700 parents in the first year alone and approximately 17,000 over the life of the waiver. In reality, a larger group is likely to be affected as they churn on and off coverage and get tied up in red tape.

Who are these families? Our analysis found that they are mostly female heads of households (at least 85%), more likely to be African-American (58%) and more likely to live in rural areas and small towns. The majority of these parents (60%) are not in the workforce because they are caring for a child or someone with a disability. Only 24% are unemployed.

While Alabama’s proposal explicitly states as a goal that it will improve health outcomes for parents and children, I would argue that the opposite is true. Research is clear that being uninsured raises the risk for parents and children to not be able to access the health services they need.

Children are at risk for three key reasons:

1. As their parents become uninsured the entire family is at risk for medical debt and even bankruptcy – moving these families in the opposite direction of economic self-sufficiency. Families at this income level already experience very high levels of homelessness and residential instability as well as higher rates of health problems.
2. A healthier parent is a better parent. For example, Medicaid has been shown clearly to reduce the incidence of depression and maternal depression is epidemic among very low income women. This inhibits parent-child bonding in the critical early years of development.
3. As parents become uninsured, research is clear that children are more likely to not have coverage as well. An insured parent almost never has an uninsured child, but a parent not having coverage raises the odds that the child too will be uninsured. This is particularly troubling because our analysis found that in Alabama these very poor children living at or below 18% of the poverty line already have a significantly higher uninsured rate of 6.2% as compared to the state’s overall rate of 2.4% uninsured kids.

For many years now, I have called Alabama the “Star of the South” for its success in covering children – more than 97% of Alabama’s children have health coverage. This is the best rate of children’s coverage in the South and ranks high nationally. This wonderful accomplishment will be at risk if the state’s waiver proposal moves forward.