Trump’s Medicaid reform will benefit the poor, sick and disabled

On Jan. 11, the Trump Administration issued a new guidance to states that will allow them for the first time in the program’s history to implement work requirements for able-bodied Medicaid recipients. Under the new policy issued by the Centers for Medicare and Medicaid Services (CMS), states can apply for waivers that would allow them to require able-bodied adults to obtain a job, enroll in job training or education programs, or volunteer as a condition to continue receiving Medicaid benefits.

On Jan. 12, Kentucky’s waiver for Medicaid work requirements was approved by CMS, making it the first time in history such reforms have been enacted.

Democrats have denounced the move as a heartless and reckless attempt to save money, but the evidence shows Medicaid in its current form is an unaffordable program that disincentivizes work, traps many people in poverty, and fails to provide adequate health care coverage for the millions of people who depend on the program.

{mosads}Under the Medicaid expansion provisions in the Affordable Care Act (ACA), a law passed in 2010 without a single Republican vote, the federal government agreed to pay 100 percent of a state’s Medicaid costs for newly eligible enrollees through 2016, but only for those states that expand Medicaid to cover all non-elderly adults with incomes below 138 percent of the federal poverty level. Since 2016, the proportion of the costs covered by the federal government has gradually been reduced and will continue to do so until 2020, when the federal share will be 90 percent.

Since the ACA first went into effect, Medicaid rolls have skyrocketed. More than 74 million Americans were enrolled in either Medicaid or the Children’s Health Insurance Program (CHIP) in October 2017, the most recent month for which data is available. CMS reports Medicaid/CHIP enrollment has risen by an astounding 16.3 million compared to just prior to when the ACA health insurance markets opened for the first time in 2013. 

These enrollment figures are significantly higher than what the Congressional Budget Office (CBO) and Democrats predicted would occur. Brian Blase, the special assistant to President Trump for health care policy and a former senior research fellow at the Mercatus Center, estimated early in 2017 Medicaid enrollment and spending in expansion states was about 50 percent higher than projected. In many states, this has caused significant financial problems. For instance, the first 18 months of Kentucky’s expansion program cost $2 billion more than what had been budgeted for that period.

Perhaps most importantly, Medicaid expansion created an incentive for states to prioritize signing up able-bodied adults over sicker or disabled adults who qualified for Medicaid prior to expansion. This is because the high federal match rate implemented by the ACA only applies to newly eligible enrollees, leaving less money available to those Americans who are disabled or very sick and in desperate need of help.

There are now about 28 million able-bodied people enrolled in Medicaid, roughly four times more than there were in 2000.

Medicaid traps families in poverty by making it difficult, if not completely impossible, to pursue good employment opportunities. Rather than steadily climb up the economic ladder, many Medicaid recipients make the decision to remain in lower-paying jobs to keep their Medicaid health insurance, or they choose not to work entirely. Census Bureau data show 44 percent of able-bodied adults in Medicaid don’t work at all. Only 24 percent work full-time all year.

This is particularly problematic because Medicaid is inferior to traditional health insurance plans, mostly because reimbursement rates for medical providers are substantially lower. Many specialists and even primary care doctors no longer accept Medicaid patients because it’s financially detrimental to do so.

Work requirements help to ensure only those who truly need assistance are enrolled in Medicaid by incentivizing people to move off Medicaid rolls and join the workforce or seek higher-paying employment. The Foundation for Government Accountability projects Medicaid work requirements would cause Medicaid enrollment to drop by 13.6 million by fiscal year 2027 and save nearly $1 trillion over the next 10 years.

Without work requirements and other reforms that help to move people away from government dependency and toward self-sufficiency, able-bodied adults will continue to consume an ever-larger amount of Medicaid funding, leaving less for the disabled, elderly, and sick the program was intended to protect.