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Arizona the Latest State to Reconsider Medicaid Work Requirements

October 22, 2019 at 3:00 PM

Arizona is suspending its plan to take Medicaid coverage away from people who don’t meet work requirements, adding to the growing list of states making similar decisions. Other states with approved or pending work requirement waivers also should reconsider these harmful policies.

In notifying the Centers for Medicare and Medicaid Services (CMS) of its decision to suspend its policy “until further notice,” Arizona cited court challenges in other states and “the evolving national landscape” for work requirement policies. The state is right to acknowledge this changing landscape. Since Arizona and most other states with approved or pending work requirement waivers adopted these policies:

  • Evidence from Arkansas and New Hampshire shows that work requirements lead to large coverage losses. In Arkansas, the first state to implement a requirement, over 18,000 beneficiaries lost Medicaid over the first seven months — nearly a quarter of those subject to the requirement. In New Hampshire, the only other state that has reached the point of taking coverage away from beneficiaries not meeting work requirements, almost 17,000 people — or about 40 percent of those subject to the requirement — were set to lose their coverage before state policymakers acted on a bipartisan basis to pause the policy.

    In both states, the number of people losing (or potentially losing) coverage exceeded estimates of the presumed target population: people who are neither working nor qualify for an exemption. That indicates that working people and people who should be exempt are almost certainly losing coverage. And New Hampshire’s experience was similar to Arkansas’ despite its determination to conduct better outreach. Its multiple outreach activities, such as mail notifications, town halls, phone calls, and text messages, were expensive but didn’t prevent beneficiary confusion or struggles among people with serious health needs to obtain exemptions.

  • Evidence from Arkansas shows that work requirements aren’t helping people find jobs. Only a small minority of those who lost coverage in Arkansas found jobs, state data show, and most of those would likely have found jobs with or without the work requirement policy. A study by Harvard researchers found no significant rise in employment, hours worked, or overall rates of community engagement activities among those subject to the work requirement — but it did find sharp increases in uninsured rates.
  • Federal courts have vacated work requirements waivers in Arkansas, Kentucky, and New Hampshire. In each case, the court affirmed that a central objective of Medicaid is to provide coverage and found that CMS didn’t adequately factor the potential coverage losses from the waivers into its approval decision. CMS, Arkansas, and Kentucky have appealed the decisions and, during oral arguments on October 11, the appeals court judges aggressively questioned Trump Administration lawyers on how work requirements advance Medicaid’s central objective of providing coverage.

Even before Arizona’s decision to suspend its work requirement, the state appeared to be experiencing the same problems as Arkansas and New Hampshire. Earlier this year, Arizona changed its work requirement implementation schedule and approach, proposing to phase in the requirement geographically, starting with urban counties in the summer of 2020 before moving to more rural counties in 2023. Arizona acknowledged that it needed time to implement the policy in “regions with limited employment, educational and training opportunities, accessible transportation and child-care services.”

Other states are also reconsidering implementation of work requirements:

  • As noted, New Hampshire lawmakers acted on a bipartisan basis in July to suspend its work requirement policy. New Hampshire would have been the second state to take coverage away from people not meeting work requirements, and it was on the brink of ending Medicaid coverage for almost 17,000 people when Governor Chris Sununu and the legislature hit the pause button.
  • Earlier this year, Maine Governor Janet Mills withdrew a waiver that would have let the state take Medicaid coverage away from low-income parents not meeting work requirements. In her letter to CMS, Governor Mills wrote that the waiver would have left “more Maine people uninsured without improving their participation in the workforce.” Maine had projected that its waiver would cause about 5,000 people to lose coverage.
  • Like Arizona, Michigan’s waiver calls for implementing work requirements in 2020. Governor Gretchen Whitmer has expressed alarm that the state’s work requirement policy will cause between 61,000 and 183,000 Michiganders to lose coverage, especially since “Michigan’s statute is more sweeping than Arkansas’s waiver, threatening a broader range of adults with more exacting reporting demands.” While state law requires Governor Whitmer to carry out the waiver, she recently urged the state legislature to consider legislation similar to what New Hampshire enacted, which would let Michigan suspend its work requirement if early data “show that significant numbers of Michiganders are on track to lose their health care....”
  • Virginia’s work requirement waiver request is still pending at CMS, but the state recently expressed serious reservations about implementing the policy due to likely coverage losses. Virginia informed CMS that without federal funding for employment supports, it “would be unable to commit to move forward with” implementing the Medicaid work requirement. The state projected that more than 25,000 people would lose coverage due to the work requirement, but that was before any state implemented a work requirement policy. Extrapolating from Arkansas’ experience, more than twice as many more than twice as manypeople — 74,000 — could lose coverage in Virginia.

Policymakers in Arizona, Maine, Michigan, New Hampshire, and Virginia are right to raise concerns regarding Medicaid work requirements and their harmful and unintended consequences. The evidence from Arkansas and New Hampshire, coupled with new litigation developments, should be a warning to the other states with approved (Indiana, Kentucky, Ohio, Utah, and Wisconsin) or pending waivers that policymakers can’t fix this policy and, instead, should rescind it.


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