For many years, government reports have said spending on entitlement programs, such as Medicaid, are unsustainable. The Centers for Medicare and Medicaid Services actuary projects that by 2023, annual Medicaid expenditures will total $850.1 billion, of which $521.8 billion will be federal expenditures and $328.3 will be covered by the states.
On Nov. 7, 2017, CMS Administrator Seema Verma spoke before the National Association of Medicaid Directors and announced steps the Trump administration was taking to modernize and improve the Medicaid program through Section 1115 Demonstration Waivers. Administrator Verma pointed out that in 1985, Medicaid only consumed 10 percent of states’ budgets; by 2016, it increased to 29 percent. She also said, “One of the things that states have told us time and time again is that they want more flexibility to engage their working-age, able-bodied citizens on Medicaid. They want to develop programs that will help them break the chains of poverty and live up to their fullest potential. We support this.”
Contrary to the hysterical claims that these waivers will be devastating and punish Medicaid beneficiaries, exemptions from the work requirements include the medically frail and disabled, pregnant women, former foster-care youth, primary caregivers, and full-time students. The waiver is primarily aimed at able-bodied adult beneficiaries between the ages of 19 and 64 that obtained health insurance through Medicaid expansion under the Affordable Care Act.
CMS issued guidance on Jan. 11 to help states incentivize work and community engagement requirements. Gov. Matt Bevin, R-Ky., already had a work-requirement waiver pending before CMS, but it was denied during the Obama administration. On Jan. 12, Kentucky became the first state to receive federal approval to impose work requirements as a condition of Medicaid coverage.
Although Bevin campaigned in 2015 to reverse the Medicaid expansion that was implemented through an executive order by his predecessor, he instead submitted the waiver request in August 2016 and has taken a lot of heat ever since. He believes the reforms will not only help individuals climb out of poverty, promote self-sufficiency, and improve their health, they will also save the state and federal taxpayers $2 billion during the five-year demonstration period. Medicaid expansion is costing Kentucky far more than anticipated and Bevin has said its cost is unsustainable. In 2012, spending on Medicaid was $5.8 billion; in 2016 spending on Medicaid was $9.9 billion, an increase of 71 percent.
Starting in July 2018, able-bodied adult beneficiaries will be required to complete 80 hours per month of community engagement such as working, education, job skills training, or community service. The waiver will also allow the state to charge minimal monthly premiums between $1 – $15 depending on income, and to suspend some individuals from the program if they fall behind in payments.
Eight other states — Arizona, Arkansas, Kansas, Maine, New Hampshire, North Carolina, Utah, and Wisconsin — have applied for similar work-requirement or community service waivers. On Feb. 12, 2017, Indiana became the second state to receive permission to impose work requirements.
Within 12 days of Kentucky obtaining the waiver, three big-government aficionados, The Southern Poverty Law Center, the National Health Law Program, and the Kentucky Equal Justice Center, filed a lawsuit against the U.S. Department of Health and Human Services, arguing that only Congress can approve these changes. Their objective is to stop any changes to Medicaid, which desperately needs to be reformed. The lawsuit endangers other enacted changes, such as requiring beneficiary premiums.
Bevin expected there would be a legal challenge to stop any attempts to reform Medicaid. Almost immediately after receiving CMS approval for the waiver, the governor filed his own executive order, ordering state officials to terminate Obamacare Medicaid expansion because the commonwealth will not be able to afford the program without the changes.
Verma is correct when she said it is time to move away from a “Washington knows best” policy and pointed out that CMS has long believed that people living with disabilities need to have meaningful work because it was essential for their economic self-sufficiency, self-esteem, well-being, and improving their health. “Why would we not believe that the same is true for working-age, able-bodied Medicaid enrollees?” she asked.
Bevin, the nine other governors, and Administrator Verma should be commended for wanting to reform Medicaid. Apparently, the public agrees with them. A June 2017 Kaiser Family Foundation poll believes 70 percent of Americans favored allowing states to impose work requirements on non-disabled adults who receive Medicaid. Taxpayers know that this sort of Medicaid reform will go a long way to averting a future fiscal calamity.
Elizabeth Wright is a contributor to the Washington Examiner’s Beltway Confidential blog. She is director of health and science policy for Citizens Against Government Waste.
If you would like to write an op-ed for the Washington Examiner, please read our guidelines on submissions here.
