Personal responsibility added to Medicaid builds on previous welfare reform

In the run-up to President Bill Clinton’s transformation — not simply reform — of welfare, opponents predicted dire consequences such as people dying in the streets of starvation, low-income families driven deeper into poverty, low-wage individuals, especially single mothers, never finding jobs, healthy children turned sickly and driven into foster care. These warnings made great headlines, sold millions of newspapers, and dominated the airways, but studies of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 proved the precise opposite happened.

Caseload (welfare rolls) declined by nearly 60 percent from 1994 to 2005. The percentage of employed single mothers rose from 40 percent to 59 percent (2013). Earnings doubled for most groups. Number of people “in poverty” dropped by nearly 39 percent by 2013. Children in poverty decreased from 20 percent to 17 percent and by every measure studied, children were better off. Fewer were in foster care.

{mosads}As President Clinton promised, PRWORA fundamentally “changed welfare as we have come to know it.” By adding personal responsibility known as work requirements, PRWORA altered the very character of welfare programs, moving Temporary Assistance to Needy Families and Supplemental Nutrition Assistance Program (formerly food stamps) from one-way entitlements to two-way transactions. What had been a government delivery of “free” hand-outs became an exchange where people gave something of themselves in return for getting something. By accepting personal responsibility, dependency became dignity.

The catch phrase “work requirements” includes many different ways for a welfare recipient to prove his or her willingness to give back to the society that provides food, shelter, money, or health care. For Medicaid, work requirements could include: job search or job training, cost-sharing for insurance premiums or copayments at point of service, incentives for healthy living, volunteerism and community service, as well as time- or dollar-limits on government support.

Thirty-four states have considered or have submitted Medicaid waiver requests to Centers for Medicare and Medicaid Services (CMS) seeking permission to add forms of work requirements to their state Medicaid programs. Predictably, the doomsday forecasters of 1995-1996 have returned in force claiming, “Work requirements are not about work, they are about taking health care away from low-income Americans,” “Work Requirements Hurt Poor Families—and Won’t Work,” and “Nancy Pelosi warns ‘hundreds of thousands of people will die.’”

Medical safety net programs such as Texas Medicaid are in desperate need of fixing. Reports such as “A Preventable Tragedy,” and “Gloss-over of the Horror” highlight the medical failures. Fiscal reports show that Medicaid spending is crowding out other state necessities. A change in character, such as produced by PRWORA, could be a positive step. Just as work requirements–adding personal responsibility–succeeded in TANF and SNAP, so too Medicaid enrollees could be better off, need less government support, and could move themselves from dependency toward self-reliance.

It is likely that welfare reform of Medicaid analogous to PRWORA will achieve similar benefits. In fact, infusion of a sense of personal responsibility to Medicaid could have an even more salutary impact than was noted in TANF and SNAP. Ask any experienced general physician. He or she will tell you that people who accept personal responsibility for their own health are healthier. Those who expect someone else, doctor or government, to give them good health are generally disappointed. 

In a January 2018 letter titled, “Opportunities to Promote Work and Community Engagement Among Medicaid Beneficiaries,” CMS indicated its interest in adding personal responsibility to Medicaid. The agency has approved four state requests–from Arkansas, Indiana, Kentucky, and New Hampshire–for various work requirements. However, CMS has refused to allow states to place any limit, time or money, on Medicaid support claiming that such limits are not consistent with “principles of Medicaid.”

This assertion seems to ignore the Medicaid’s own Estate Recovery Program (MERP). After the death of an enrollee, MERP allows a state to claw back funds expended on the beneficiary from the decedent’s estate. In effect, Medicaid policy allows states to put a dollar limit of zero for support of the medical care of enrollees.

Changing the character of Medicaid as was done with TANF and SNAP will have profound, continuing benefits that are fiscal as well as philosophical. Those are incapable of being fully responsible for themselves need society’s ongoing support. Those are who physically and mentally capable should be willing and eager to give back in return for government-provided health insurance. The disabled will always be to some degree dependent. Americans who are able should naturally strive toward independence and self-reliance.

Dr. Deane Waldman MD MBA, is Director of the Center for Health Care Policy at the nonprofit Texas Public Policy Foundation.