The judiciary strikes a blow to Medicaid reform

At the end of June, a U.S. District Court judge blocked Kentucky Gov. Matt Bevin from imposing work requirements on Medicaid recipients. According to the ruling, Bevin’s reforms would have undermined Medicaid’s mission to help low-income Americans access medical care. Unfortunately, the judge’s decision will likely worsen health care access for Medicaid patients in the Bluegrass State.

Judge James Boasberg issued his ruling after advocacy groups representing 15 Kentucky Medicaid recipients sued the Department of Health and Human Services (HHS) for approving Bevin’s request to impose work requirements on the program’s able-bodied adults. The plaintiffs argued Bevin’s measures would have compromised Medicaid’s mission to deliver health care to patients. Boasberg ultimately sided with the advocates, ruling “[HHS] never adequately considered whether [Kentucky’s work requirements] would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

{mosads}Boasberg is simply wrong to think work requirements would weaken Medicaid’s capacity to deliver health care. When HHS released new guidance to help states introduce work incentives, the agency cited numerous studies that show individuals experience greater physical health and mental health and longer lifespans when they find work.

A key reason why employed individuals enjoy better health is because employer-sponsored insurance offers far more reliable coverage than Medicaid, which is the primary insurer for the unemployed. Since employer-based plans reimburse physicians at higher rates than Medicaid, doctors are more likely to treat these patients than Medicaid enrollees. According to a nationwide survey by the Center for Studying Health System Change, more than 35 percent of internal and general medicine physicians refuse to accept new Medicaid patients. In contrast, only 5 percent of these physicians refuse to treat patients with private insurance.

Yet despite these disparities, Medicaid actively discourages individuals from working. A 2015 analysis from the Congressional Budget Office (CBO) projected Medicaid expansion, which was created under the Affordable Care Act, would incentivize individuals to “work fewer hours or withdraw from the labor force to become or remain eligible” for the program. And as the CBO predicted, 52 percent of able-bodied Medicaid recipients are now unemployed nationwide, according to the U.S. Census Bureau.

Work requirements promise to reverse Medicaid’s disastrous incentives, which discourage millions of Americans from entering jobs with high-quality health insurance. Since 2017, 11 states have requested permission from the Trump administration to require able-bodied adults to work, volunteer, enroll in education programs, or undergo job training to help them find meaningful work and employer-based coverage.

Boasberg’s rejection of Kentucky’s work requirements could set a dangerous precedent, effectively trapping poor adults in this broken health care program. And without the ability to move able-bodied individuals off of Medicaid’s rolls, states will find it increasingly difficult to treat patients because costs will continue to spiral out of control. Medicaid’s share of state budgets will increase from 30 percent to 38 percent over the next seven years, according to a report from Fitch Ratings. 

If Boasberg’s ruling prevents other states from introducing work requirements, they will likely slash reimbursements to doctors to control costs, making it even more difficult for Medicaid enrollees to find much-needed care. States are already reducing payments to providers as their budgets bust because of Medicaid’s skyrocketing costs. In June, the Dayton Daily News reported Ohio will cut Medicaid’s reimbursements to hospitals by $214 million over the next fiscal year. Minnesota will lower compensation for disability service providers by $80 million over the next years. And Montana has slashed payments to nursing homes by $3 million since January.

As Medicaid’s booming costs crowd out medical care for the truly needy, it is critical that states and the Trump administration push back against Boasberg’s ruling and other misguided attempts to block work requirements. Otherwise, Medicaid will continue to trap individuals in a government-run health insurance program that is increasingly unable to deliver quality health care.

Charlie Katebi is a state government relations manager at The Heartland Institute, a nonprofit, nonpartisan public policy think tank.