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.
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.