The Medicaid exchange coverage has been dropping over time since the passing of the Affordable Care Act (ACA). Over 1 million people have already dropped their Medicaid exchange insurance in 2018, a trend that's likely to increase over the course of the year. Last year in the 2017 enrollment year, 1.4 million people dropped coverage.
Why is this taking place?
Medicaid pays 57% of all Medicaid benefits, the rest comes out of each state. Looking through a “federal lens,” one guess in the decline is that people no longer benefit from signing up: many people are now no longer eligible for the Advanced Premium Tax Credit (APTC) which helped defray the cost of coverage.
With five months left in 2018, we should expect to see more people dropping their Medicaid coverage as they can no longer afford it. However, with a new mandated work requirement, we may see an increase in health insurance but not necessarily through Medicaid.
When Congress passed the ACA, one of the provisions was for Expanded Medicaid. Under this mandate, residents earning 138% of the Federal Poverty Level (FPL) now qualify for Medicaid benefits. To date, 33 states have ratified expanded Medicaid.
The Trump Administration now requires a person to work in order to qualify for Medicaid. The number of working hours is up for the state to determine. As part of the Federal design, those exempted from the work requirement include:
primary caregivers of a dependent,
beneficiaries considered medically frail or have an acute medical condition that would prevent them from complying.
Kentucky was the first of four states (Arkansas, Indiana, and New Hampshire are the other three) that won federal approval this year to implement a work requirement as a stipulation for receiving Medicaid. Seven more states have applications pending with the federal government: Arizona, Kansas, Maine, Mississippi, Ohio, Utah, and Wisconsin.
Kentucky’s program would require nondisabled adults to participate in 80 hours of work each month; this includes job training, education, or other volunteer service to remain covered. Those failing to meet the requirement would be able to resume coverage upon completion of 80 hours of community engagement in a 30-day period or by taking a state-approved health literacy or financial literacy course.
However, on June 29th, a federal judge struck down the Trump Administration decision. The 60-page ruling, which is likely to be appealed, could limit the number of states expanding Medicaid under the Affordable Care Act.
In the ruling, Judge Boasberg noted that “The Secretary never adequately considered whether [the work requirement] would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid…This single omission renders his determination arbitrary and capricious.”
Boasberg also noted that “the Secretary never provided a bottom-line estimate of how many people would lose Medicaid with Kentucky HEALTH in place. This oversight is glaring, especially given that the risk of lost coverage was ‘factually substantiated in the record’.”
Kentucky state officials estimate about 200,000 adults would have to comply with the new work requirements by year’s end.
Kentucky Gov. Matt Bevin threatened to scale back the health program if the courts rejected the mandate, a move that could leave hundreds of thousands of low-income adults without coverage. Within 36 hours after the ruling, Bevin eliminated vision and dental benefits to nearly 500,000 Medicaid enrollees, saying the state could no longer afford it.
Mississippi, in what appears to be a knee-jerk reaction to the ruling, has added a beneficiary protection provision into its work requirement waiver last week, allowing beneficiaries to receive one year of transitional coverage after meeting the work requirement. Approximately one in four Mississippians receive Medicaid coverage. However, only about 7% of those beneficiaries would be subject to the work requirement.
Even if this ruling is appealed, it is expected (in the short-term) that several of the states will loosen the requirement. Either way, with many people un-enrolling from Medicaid, the result will be higher premiums for everyone else.
Among working people who gained coverage through Medicaid expansion in Ohio and Michigan, majorities reported that gaining coverage made them better at their jobs or made it easier for them to keep working. That probably reflects the fact that, for the many Medicaid enrollees with serious health conditions, Medicaid provides access to needed treatments that allow them to control these conditions and maintain employment.
Although not discussed in open forum, many working people could also lose coverage due to work requirements. Most non-elderly adult Medicaid enrollees work, but they hold low-wage jobs that generally do not offer health insurance. Moreover, these jobs are often unstable, with frequent layoffs and job losses as well as work hours that can fluctuate sharply from month to month. As a result, approximately 45% of low-income workers would be at risk of losing coverage under a work requirement policy like Kentucky’s. Even among people working 1,000 hours over the course of the year — about 80 hours per month, meeting Kentucky’s standard on average — 1 in 4 (25%) would be at risk of losing coverage because they would not meet the 80-hour requirement each month.
One common cause of job loss among low-wage workers is health problems. Low-wage jobs offer little flexibility and don’t provide sick leave. If employee needs to see a doctor, they must take time off work, thus losing that day’s wages. It’s a lose-lose situation.
In states with work requirements, health setbacks resulting in job loss may then lead to loss of coverage and access to treatment, making it far harder for people to regain health and employment. Similarly, loss of coverage due to failure to document enough hours of work may result in deteriorating health, causing job loss.
While the Administration argues that Medicaid work requirements will improve economic mobility, the sad truth is that they are likely to do the opposite. In addition to reducing coverage, access to care, and financial security and worsening health, it’s putting a strain on workers to ensure they get the hours to qualify for care each month. In an economy with low-wage workers continually lose jobs to self-serving kiosks and other technologies, these type of hour requirements will have significant implications on whether or not they will be able to receive the health care they need.