Some States’ Letters to CMS on Medicaid Work Requirements Double Down

Last month, CMS began taking steps to get rid of Medicaid section 1115 work requirement waivers as my colleague Joan Alker has written about. The Biden Administration sent letters to states with approved work requirements that “preliminarily” disapproved the policy on the basis of the COVID-19 pandemic and uncertainty of its aftermath on health and economic opportunities; these letters also included a 30-day deadline for states to respond. Fast forward to last week when another round of activity occurred at the Biden Administration’s CMS – which included CMS posting the letters from the states that chose to respond. (Side note it was a victory for transparency that CMS publicly posted the letters).

After these state letters were sent, CMS formally withdrew its approvals for work requirement waivers in Arkansas and New Hampshire, citing, among other things, the coverage losses that have and would continue to result from the policy. States’ response letters to CMS vary greatly in argument and tone, giving significant insight into how states are approaching the Biden Administration’s clear shift away from work requirements. However, none of the letters address the core issue of the requirements — loss of benefits or coverage.

Out of the 11 states that received a letter on February 12, seven states responded (AR, GA, IN, NE, OH, SC, and UT). The other four states (AZ, MI, NH, and WI) did not respond. New Hampshire did not intervene in the Supreme Court case on work requirements, so the lack of response is not entirely shocking. Of the seven states that responded, five are expansion states (AR, IN, NE, OH, and UT) whose waivers apply to the expansion population. The other two, Georgia and South Carolina, have not expanded Medicaid, with their work requirements applying to a faux expansion population, and in the case of South Carolina, also applying to the state’s non-expansion population (parents with incomes up to 67% FPL or $1,226 per month for a family of three).

Among the states that did submit a response letter, the responses from Arkansas and Georgia stand out. Arkansas presented a number of arguments including trying to dispute the state’s own data on coverage losses resulting from implementing the work requirements. (For reference, the state reported in January 2019, over 18,000 beneficiaries had lost coverage due to not meeting the requirement.) The state also requested additional time to respond to the agency, arguing any decision made without this time would be “arbitrary and capricious” (the irony of this statement given recent history is truly astounding).

Georgia’s letter had the most combative tone and an even more mind-boggling line of reasoning. The state argued its waiver cannot continue without the work requirement since they are at the “core” of the waiver — the basis of enrollment – and furthermore, that it has no obligation to expand Medicaid eligibility to low-income adults, which is true as a legal matter but shocking as a moral one. As our previous blog detailed, Georgia’s waiver would allow the state to condition Medicaid eligibility for adults not currently eligible (childless adults with incomes up to 100% FPL and parents with incomes between 35% and 100% FPL) on meeting 80 hours of work or qualified activities per month in order to enroll and maintain coverage.

Both the letters from Arkansas and Georgia rejected the basis of CMS’s preliminary disapproval letter, the pandemic. Last week, however, CMS expanded on its prior justification for withdrawing approved work requirements in its AR and NH withdrawals, with detailed factual findings and extensive citations to research on the impacts of the policy. Georgia took its argument even further by inconceivably claiming that the pandemic actually “makes qualifying hours and activities … more important, not less.”

Another unique piece of the Arkansas and Georgia responses is the reliance on the since-rescinded January 4th letters from the previous CMS Administrator changing the process for modifying or withdrawing waiver authorities, which both states signed. The states argue that the signed letters are binding, despite an unambiguous message from the new administration that these letters have no force of law and that, under Medicaid statute, section 1115 waivers are at the discretion of the Secretary.

The letters from the five other states are more measured, largely doubling down on the flawed hypothesis that work requirements will make beneficiaries healthier and promote economic independence. Nebraska argued its requirements promote “holistic health of the individual;” Ohio wrote that its policies “drive improvements in economic status” which impact health; South Carolina notes the purpose of its waiver is to incentivize beneficiaries to “achieve self-sustainability.”

However, federal courts have unanimously ruled that the primary objective of Medicaid is to provide health coverage; these states’ work requirements would do the opposite as was clear from the experience of Arkansas. Furthermore, there have been a number of studies on the Arkansas work requirements which found no evidence the policy increased employment or community engagement.

Some of the state’s letters also claim that their work requirement waivers are different than other states’ programs (i.e., Arkansas) and there are mechanisms in place to make their programs better. For example, Indiana spent half of its letter discussing the systems and outreach it has in place to be “successful.” The letter from Ohio indicated its waiver was different than the programs under review by the Supreme Court.

There is one obvious assertion missing from all of the states’ letters: beneficiaries will not lose benefits and/or coverage. And that is because the states cannot say that. The proof is in the data: In Arkansas, 18,000 beneficiaries lost coverage from not meeting the state’s work requirements; almost 17,000 individuals were expected to lose coverage in just a month if New Hampshire’s work requirements went into effect; and a third of beneficiaries in Michigan subject to work requirements (80,000 people) were estimated to be at risk of losing coverage if the policy was fully implemented.

Work requirement waivers are designed to impose red tape and result in punitive actions against low-income Medicaid beneficiaries, and as a recent HHS issue brief concluded, these waivers carry significant risk of harming health and access to care.

 

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