CMS pulls back on Medicaid work requirement policies

The Biden administration on Friday started to unwind a controversial Trump-era policy that allows states to force low-income residents to work, volunteer or take part in other so-called “community engagement” activities to enroll in Medicaid coverage.

The news comes just two weeks after President Joe Biden ordered federal health officials to reexamine policies that make it more difficult for individuals to access or afford coverage, including Medicaid work requirements. CMS withdrew a 2018 letter from former CMS Administrator Seema Verma to state Medicaid officials that invited them to apply for the waivers. The agency also reversed its approval for Georgia’s partial Medicaid expansion, which is now “pending.” CMS will also send a letter to 10 states with waivers for Medicaid work rules, informing them that the agency will repeal their waivers soon, Politico first reported.

Dan Mendelson, a former Clinton administration official and founder of consulting firm Avalere Health, said undoing the waivers is consistent with the Biden administration’s stated goal to increase the number of people with health insurance because the Trump-era “policy directly contradicts what they are trying to accomplish.”

But it could take time to undo the waivers. Just before former President Donald Trump left office, Verma asked states to sign contracts that would make it more challenging for CMS to end states’ work requirements. Experts question whether those contracts are legally enforceable. But the Biden team will need to review them to see how much flexibility they allow. Mendelson said that Medicaid is an ongoing negotiation between the federal government and states because it is jointly funded and administered.

“Now that states understand the policy … there will be accommodations (to) make sure that these programs are operating smoothly and that (states) don’t have to make radical changes quickly that would jeopardize the operation of their Medicaid programs,” Mendelson said.

Most experts agree that there shouldn’t be much disruption since work requirements aren’t in effect in any state. In addition, states stopped disenrolling Medicaid beneficiaries to get a 6.2% increase in their federal share of Medicaid spending during the public health emergency.

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. Of the 13 states CMS approved for a work requirement, Arkansas was the only state to implement its experiment completely. But a federal court struck down the demonstration after seven months because the work rules were inconsistent with the Medicaid law. A federal appeals court agreed.

The D.C. Circuit opinion, written by Republican-appointed Judge David Sentelle, said it “is indisputably correct that the principal objective of Medicaid is providing healthcare coverage,” not to encourage work.

A Health Affairs study about Arkansas’ demonstration found that more than 18,000 people, or nearly 1 in 4 people covered by the waiver, lost their coverage and suffered profound adverse effects on their finances and medication adherence. The same study found that the requirements didn’t increase employment.

Conservative policymakers still insist that requiring people to work to receive Medicaid coverage encourages more people to work, which is good for their long-term well-being and ensures that people don’t receive benefits if they don’t qualify for them.

But most experts agree that having health coverage keeps people healthier, which allows them to work more hours, not the other way around.

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