Senior Policy Analyst
The Centers for Medicare and Medicaid Services has approved two Medicaid waivers for Arizona that will reduce coverage, make it harder for people to access affordable care, and increase financial hardship. The first waiver lets the state take away Medicaid from people not working or engaged in qualifying work activities for 80 hours each month, while the second lets the state halt retroactive coverage — an important provision that protects beneficiaries against medical debt. Rather than advancing one of Medicaid’s main objectives — to provide affordable coverage to those who would otherwise be uninsured — as waivers are supposed to do, Arizona’s waivers will cause thousands of residents to lose coverage and face greater financial insecurity.
Arizona seems ready to implement its proposals, effective January 1, 2020, despite mounting evidence that many of those losing coverage will be working people and people with serious health needs who can’t overcome the red tape that these policies create. For example, since Arkansas became the first state to implement Medicaid work requirements in June, over 18,000 beneficiaries have already lost Medicaid and likely became uninsured.
In fact, the number of those losing Medicaid coverage exceeds the policy’s presumed target population — namely, people who are neither working nor qualify for an exemption — so working people and people who should be eligible for exemptions are almost certainly among those losing Medicaid. News accounts confirm that the policy is having severe unintended consequences — including working people losing their jobs because they fail to meet complex reporting requirements, then losing their Medicaid, and then being unable to get the treatment for chronic conditions that’s necessary for them to work.
These coverage losses have led the nonpartisan Medicaid and CHIP Payment and Access Commission (MACPAC), which advises Congress and the Executive Branch on Medicaid and CHIP policy, to call on the Administration to pause both Arkansas’ disenrollments and other states’ pending work requirement proposals. The failure of most Arkansas beneficiaries to satisfy the new rules “is a strong warning signal that the current process may not be structured in a way that provides individuals an opportunity to succeed, with high stakes for beneficiaries who fail,” MACPAC warned.
Like Arkansas, Arizona has an 80-hour-per-month requirement that applies to adults age 19 to 49 and exempts all parents. After an initial three-month grace period, people will lose coverage for two months if they fail to meet the requirement in any month. While Arizona didn’t estimate the waiver’s impact on coverage, it projects that 120,000 adults will be subject to the work requirement. All these adults would be at risk of losing coverage if they can’t meet the requirement, and the resulting coverage gaps will worsen health outcomes for many low-income adults.
As in Arkansas, many Arizonans who will likely lose coverage will be working people who can’t meet the 80-hour requirement. They work in industries like retail, home health, and construction — where hours fluctuate from month to month and there’s little flexibility, so that any illness, family emergency, or disruption in child care or transportation can cost them their jobs.
In addition, people with disabilities or serious illnesses may lose coverage because they don’t meet the standards to qualify for exemptions, don’t know they qualify, or have a hard time providing the necessary documentation. Red tape and paperwork requirements reduce enrollment in Medicaid, studies show, and people with mental illness or serious physical limitations may have particular difficulty overcoming these barriers. For example, research shows that families sanctioned due to non-compliance with work requirements under the Temporary Assistance for Needy Families (TANF) program are likelier than other families receiving TANF to have barriers that keep them from working and that should exempt them from the requirements, such as having a child with a chronic illness or disability.
Arizona’s second waiver lets the state stop providing retroactive coverage, an important financial protection for beneficiaries like seniors and people with disabilities. Retroactive coverage pays providers for medical care provided to individuals up to three months before they applied for Medicaid, if they were eligible during this three-month period, reducing their risk of incurring medical debt. And since retroactive coverage reduces uncompensated care costs, ending it jeopardizes the financial stability of hospitals and other safety net providers.
Medicaid is an important source of coverage for low-income adults. Since Arizona expanded Medicaid under the Affordable Care Act in 2014, it has provided coverage to almost 400,000 Arizonans, causing the state’s uninsured rate to drop by 37 percent. The Medicaid expansion has also improved Arizona providers’ financial security: since 2013, uncompensated care in the state has fallen by over half as a share of hospital budgets. The coverage losses from the state’s rigid work requirements and the elimination of retroactive coverage will threaten this progress.
Providers in Arizona have taken notice. The state chapter of the American Academy of Pediatrics, for example, commented that eliminating retroactive coverage “…will put patients and families at risk for medical debt as well as increased uncompensated care costs for hospitals .… [T]his could put hospitals … at risk for cuts or closure, potentially leaving entire communities with limited or no access to health care.”