The Centers for Medicare and Medicaid Services pulled the plug on Arizona's and Indiana's plans to require some Medicaid beneficiaries to work, attend job training or participate in other activities to keep their health coverage, according to letters the federal agency sent the two states Friday.
The waivers President Donald Trump's administration approved were unlikely to promote the objectives of Medicaid, which federal courts have ruled is to provide health insurance, CMS Administrator Chiquita Brooks-LaSure wrote in the letters. The pandemic also presents challenges to the Medicaid population that make work requirements especially burdensome, she wrote. At this time, beneficiaries may lack access to economic opportunities, transportation and affordable childcare as the public health emergency gradually winds down. Imposing a work requirement under these circumstances could lead to unfair benefit losses, she wrote.
"Losing health care coverage undoubtedly has negative consequences for affected beneficiaries down the road," Brooks-LaSure wrote.
The waivers hadn't taken effect in either state, as both had accepted a temporary 6.2% increase in federal funding for their Medicaid programs during the public health emergency. That barred them from kicking people off the program.
CMS' reversal of these work requirements is part of the Biden administration's commitment to expanding health coverage. No state currently has an active work requirement, in part because of litigation and in part because they postponed implementation during the pandemic.
Democrats, consumer advocates and many healthcare experts oppose work requirements for Medicaid coverage, arguing that they lead to sizable coverage losses and don't increase employment. Research supports this contention. When Arkansas enacted work requirements in 2018, more than 18,000 people, amounting to nearly one-fourth of Medicaid enrollees subject to the rule, lost coverage, according to a study published in the journal Health Affairs. Moreover, these individuals suffered significant financial and health consequences—and the policy didn't lead to job gains, the study found. More than 6 in 10 working-age adult Medicaid beneficiaries without disabilities already are employed, according to survey data compiled by the Kaiser Family Foundation in 2019.
Conservative policymakers still insist that requiring people to work to receive Medicaid coverage encourages more them to seek employment. That would improve their long-term well-being and ensure that people don't receive benefits to which they aren't entitled, proponents such as former CMS Administrator Seema Verma have argued.
Still, most analysts believe that having health coverage facilitates work by keeping people healthier, not that loss of benefits encourages work. They also believe there are better ways to encourage Medicaid-eligible people to get jobs or higher-paying employment.
CMS notified states in February that it would review previously approved work requirements. That followed a January executive order from President Joe Biden directing federal agencies to reexamine policies that make it more difficult for people to access or afford coverage. The agency still hasn't decided the fate of work requirement policies in Georgia, Ohio, South Carolina and Utah, but it's only a matter of time before CMS tosses out their waivers.
The Supreme Court canceled March's oral arguments in a case challenging the legality of Medicaid work requirements in Arkansas and New Hampshire after the Biden administration withdrew its support for the lawsuit, which the previous administration backed.