'Bureaucratic' Medicaid Work Rules Linked to Coverage Losses

Kerry Dooley Young

June 20, 2019

Arkansas' attempt to attach work requirements to Medicaid caused almost 17,000 adults to lose this healthcare coverage within the first 6 months, and there was no significant difference in employment, a study has found. The researchers say this loss of coverage was partly a result of bureaucratic obstacles and confusion about the new rules.

In June 2018, Arkansas became the first state to implement work requirements for Medicaid, Benjamin D. Sommers, MD, PhD, of the Harvard School of Public Health, Boston, Massachusetts, and colleagues write in an article published online June 19 in the New England Journal of Medicine.

The findings appear to run contrary to the expectations regarding Medicaid work requirements, which have been a popular cause with Republican governors in recent years. More than a dozen other states are trying to impose work rules for Medicaid or have already received federal permission for them, according to the nonprofit Kaiser Family Foundation, which closely studies this state-federal health program.

In March of this year, a federal judge halted the work-rules program, citing concerns about coverage losses.

For many Arkansans, it was the difficulty of reporting compliance with the Medicaid work rule, not the employment mandate itself, that resulted in a loss of coverage, according to the authors. More than 95% of persons who were targeted by Arkansas' Medicaid work policy already met its requirements or should have been exempt, they write.

"Many Medicaid beneficiaries were unaware of the policy or were confused about how to report their status to the state, which suggests that bureaucratic obstacles played a large role in coverage losses under the policy," the researchers explain.

In 2018, the Centers for Medicare & Medicaid Services approved Arkansas' plan for tying work rules to Medicaid eligibility. The state began phasing in the work requirement in June 2018 for people aged 30 to 49 years. Sommers and colleagues recap in their article how Arkansas officials used the mail and informational fliers to tell this group of Medicaid enrollees that they were required to work 80 hours per month or participate in another qualifying community engagement activity, such as job training.

Exemptions to the work rules were made for pregnant women, full-time students, persons caring for a child or other household member, and people who had disabilities or were receiving treatment for substance abuse. Failing to meet the requirement or to submit monthly online reports for 3 months within a year would lead to removal from Medicaid.

Given the limited data on the effectiveness of Medicaid work requirements, the authors decided to see whether the Arkansas rules had affected insurance coverage and employment. They designed a survey that included people in Kentucky, Louisiana, and Texas as a control group. Their overall sample included 5955 respondents.

The percentage of Arkansas respondents aged 30 to 49 years who lacked health insurance rose from 10.5% in 2016 to 14.5% in 2018. In the control states, it stayed flat at 16.2%.

To assess continued Medicaid participation, the researchers had to account for Arkansas' unusual approach to expanding this program through funds made available by the 2010 Affordable Care Act (ACA). For most of the newly eligible adults in the state, Arkansas used Medicaid funds to purchase plans created by the ACA marketplace, an approach sometimes called the private option.

This differed from the approach in the control states used in the project. Louisiana and Kentucky have expanded their Medicaid programs such that most adults who were contacted for the survey were eligible for Medicaid but not ACA marketplace plans. Texas is among the 14 states that have not yet decided to expand their Medicaid programs by raising the income cutoffs, according to the Kaiser Family Foundation.

"Because of the blurred boundary between Medicaid and marketplace coverage in Arkansas, coverage with Medicaid alone or marketplace coverage alone in Arkansas as compared with the other states would be misleading," the authors write. "Accordingly, we combined Medicaid and marketplace coverage into a single category."

The percentage of the Arkansas respondents aged 30 to 49 years who reported being covered through Medicaid or a marketplace plan dropped from 70.5% in 2016 to 63.7% in 2018. In the control states, there was a slight increase for this group, from 59% to 60.4%.

There also was a small increase in Arkansas for those aged 30 to 49 years in the percentage who reported having employer-sponsored insurance. It rose from 10.6% to 12.2% from 2016 to 2018. In the control states, among persons in this age range, there was a drop from 15.8% to 13.4%.

Sommers told Medscape Medical News it would be inaccurate to see these statistics as evidence that work requirements led to increased employer coverage.

The percentage of Arkansas respondents aged 30 to 49 who worked 20 hours or more per week dropped from 42.4% in 2017 to 38.9% in 2018. For the same age group in the control states, the decline was from 45.2% to 39.5%

"So while it's possible that some people who left Medicaid did obtain private coverage, many Arkansans did not obtain other coverage — evident in the statistically significant rise in the uninsured rate in our data," Sommers said.

Struggles to Comply

Indeed, a federal judge said the regulatory burdens of Arkansas' Medicaid work rules contributed to at least one person's loss of a job.

US District Judge James E. Boasberg led his March decision against the state with the story of Adrian McGonigal of Pea Ridge, Arkansas, a worker at a poultry firm who struggled to comply with the reporting requirements. McGonigal's employer did not provide him with insurance. But McGonigal, who had several serious medical conditions, was able to qualify for Medicaid, according to Boasberg.

"Despite his lack of access to, and difficulty working with, computers, he was able to report his employment in June 2018, but he did not know he needed to continue to do so each month," Boasberg wrote. "As a result, when he went to pick up his prescriptions in October, the pharmacist told him that he was no longer covered, and his medicines would cost him $800."

Unable to pay this bill, McGonigal went without his medicine, which caused his medical conditions to flare, the judge wrote. As a result, McGonigal missed several days of work, and the firm fired him for his absences.

"He thus lost his Medicaid coverage and his job," the judge wrote.

The authors detail some of the misunderstandings they heard from respondents about the Medicaid work rules.

Among Arkansas respondents aged 30 to 49 years who had Medicaid or marketplace coverage or no insurance, 21.8% thought that they were or would be subject to the work requirements, while 44.2% were unsure, the authors write. A total of 14.4% of the respondents outside this age group incorrectly believed that they were subject to the requirements, and 50.2% were unsure.

The findings from their study are consistent with previous research on the rate of employment among the Medicaid population, said MaryBeth Musumeci, JD, associate director of the program on Medicaid and the uninsured at the Kaiser Family Foundation.

"The vast majority of Medicaid enrollees already are working or have some other barrier or responsibility that prevents them from working," Musumeci told Medscape Medical News.

Kaiser's research also found that many people struggled with the bureaucratic tasks of the Arkansas Medicaid work rule.

"Reporting was really a barrier," Musumeci said. "People were in fact either doing the required number of hours or were exempt, but it was that administrative barrier of navigating the reporting system that posed a problem."

The study was funded by the Commonwealth Fund, Baylor Scott & White Health, and the Robert Wood Johnson Foundation. The authors have received grants and other financial relationships outside of the submitted work from AcademyHealth, the American Economic Journal, the Health Research and Education Trust, the Northwestern Medical Center, the Massachusetts Medical Society, the Robert Wood Johnson Foundation, the University of Chicago, and the University of Cincinnati. An author also serves as associate editor for the New England Journal of Medicine.

N Engl J Med. Published online June 19, 2019. Abstract

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