MEDICAID HELPS LIFT FAMILIES OUT OF POVERTY
The President issued an executive order earlier this month titled “Reducing Poverty in America by Promoting Opportunity and Economic Mobility”. It requires the Secretaries of Treasury, Agriculture, Commerce, Labor, Health and Human Services, Housing and Urban Development, Transportation and Education to review all regulations and guidance to ensure they are within the boundaries of the executive order, and if not, that they must propose how they will change their department’s policies.
The Executive order states: “The Federal Government should do everything within its authority to empower individuals by providing opportunities for work, including by investing in Federal programs that are effective at moving people into the workforce and out of poverty.”
The executive order includes several “Principles of Economic Mobility” to guide the departments in policymaking. While reducing poverty is a noble goal, these principles fundamentally misunderstand and misguide departments about the relationship of Medicaid, poverty and employment.
One of the “Principles of Economic Mobility” is to “improve employment outcomes and economic independence (including by strengthening existing work requirements for work-capable people and introducing new work requirements when legally permissible)”.
Medicaid work requirements have so far only been approved by CMS in states that chose to expand Medicaid to a wider population, including low-income adults who are not covered in states like Tennessee that chose not to expand.
However, even in expansion populations, there is not sufficient research that shows that work requirements would “improve employment outcomes and economic independence”. In fact, expansion has had positive economic impacts, including for individuals that receive care through Medicaid and for the states that expanded. For example, Louisiana, an expansion state, has added 19,000 new jobs, saved $317 million and covered 470,000 more people since they expanded.
Medicaid expansion has had no negative impacts on work, and in fact, helps keep people healthy enough to keep working and has made it easier for people with disabilities to work. Not every person with a disability who has trouble getting and keeping a steady job qualifies for Medicaid. Prior to the ACA, many people with disabilities were required to live in poverty to maintain their Medicaid eligibility. With Medicaid expansion, they can now enter the workforce, increase earnings, and maintain coverage.
There are many more positive effects of Medicaid expansion: Medicaid expansion states are less likely to have hospital closures; Medicaid expansion enrollees do better at work or in their job search; there is increased receipt of recommended pediatric preventive care for the children of Medicaid expansion adults; and uptick in enrollment of uninsured children.
Analysis shows that Tennessee would benefit from expanding Medicaid, including a decrease in out-of-pocket costs, a decrease in the number of uninsured and a decrease in uncompensated care costs.
But the Tennessee legislature just passed legislation that directs TennCare to design work requirements within the guidance of CMS. Although this executive order is on the federal level, the administration’s recommendations influence state-level policy, as we’ve seen with this recent TennCare work requirements bill.
Tennessee does not have the same childless adult population on Medicaid that exists in other states, and it is still unclear who the work requirements are targeting. Another looming question is if work requirements are “legally permissible” even in expansion states, let alone non-expansion states like Tennessee.
For the traditional Medicaid population (which is mostly children, parents of minor children, the elderly and people with disabilities) like the one in Tennessee, Medicaid is a significant tool in reducing poverty and improving outcomes for lifelong success for children in particular. Medicaid does not trap families in poverty; in fact, Medicaid helps low-income children escape poverty.
Medicaid is one of the most effective antipoverty programs in the United States, comparable to the combined effect of all social insurance programs and greater than the effects of non-health, means-tested benefits and refundable tax credits, like the Earned Income Tax Credit (EITC) and Supplemental Nutrition Assistance Program (SNAP) benefits. Medicaid has a larger effect on child poverty specifically than all non-health, means tested benefits combined.
Even if a Medicaid beneficiary finds a job that has employer-sponsored insurance, Medicaid is still the best type of insurance for reducing poverty among beneficiaries. In the study, they showed that Medicaid reduced poverty by 17.1 percentage points for its beneficiaries, compared to 5 percentage points for employer-sponsored insurance and 6.6 percentage points for premium subsidies.
The evidence is clearly against work requirements as a tool to increase employment or end poverty.
Another one of the “Principles of Economic Mobility” in the executive order is “reducing the size of bureaucracy and streamlining services to promote the effective use of resources”.
The evidence is also against work requirements fulfilling this principle.
Most Medicaid work requirements proposals include an hourly work requirement, which makes little sense for lower-income workers, who often have shifting schedules and seasonal jobs. Even the low-income workers who fulfill the requirement will have the burden of getting and submitting regular documentation of employment, which does not sound like “reducing bureaucracy”.
These work requirements by definition are increased bureaucracy, including increased caseload, increased reporting requirements for people on TennCare AND employers of people on TennCare.
Are work requirements an “effective use of resources”?
If the goal is to increase employment and self-sufficiency, there are numerous other ways to use the same resource to provide better work and family supports, like child care support services and transportation.
Additionally, Tennessee has not modernized Medicaid and CHIP enrollment and renewal processes. We do not use the modern practices like automated renewals and real-time eligibility determinations like other states. We don’t even have our own computer system, but instead, applications are processed though the federal Marketplace. Resources could be used to improve the administration of benefits to eligible populations.
Work requirements are very burdensome for both Medicaid recipients and for the state administration and seem to directly challenge the goal of “streamlining services to promote the effective use of resources.”
In addition, Tennessee still has not expanded Medicaid eligibility with cost being one of the concerns of opponents. However, the research is clear: adults who live in non-expansion states are significantly more likely to report an unmet need for health care due to cost and problems paying family medical bills.
So why has our legislature passed burdensome work requirements when Tennesseans are already disadvantaged when it comes to getting the care that they need? Why are we spending money to take care away from Medicaid recipients? Since it won’t encourage self-sufficiency or reduce poverty, it must be to cut people off the TennCare program.