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Iowa Bill Would Cause Thousands to Lose Medicaid Coverage

In Iowa, a Senate-passed bill that’s now before the House would almost certainly take Medicaid coverage away from thousands of people who can’t meet a work requirement.

The bill, which the Senate passed yesterday, would require all non-elderly adult Medicaid beneficiaries to document 20 hours of work, education, substance use treatment, or volunteer activities each week (or 80 hours a month) to maintain their coverage, unless they qualify for an exemption. The state would shift beneficiaries who didn’t meet the 80-hour threshold in each of their first six months in Medicaid to a limited-benefit plan. After another six months of not meeting the requirement, beneficiaries would lose Medicaid coverage altogether.

In Arkansas, the only state to implement a work requirement to date, more than 18,000 people – almost 1 in 4 of those subject to the requirement – lost coverage in the first seven months. Many are likely working or have serious health needs that should have exempted them, but they couldn’t overcome the red tape that the policy created. That’s an unintended but unavoidable consequence of any work requirement, as we’ve explained.

Based on what we’ve seen in Arkansas, as well as other analysis and work requirements in other federal programs, the following groups of Iowans would face particular risk of losing coverage.

  • Working people with unstable jobs. In Iowa, nearly three-quarters of adults with Medicaid are already working, but the most common jobs are in restaurants and food service. Low-wage jobs like these have volatile hours and little flexibility, so an illness or family emergency can lead to job loss and periods of unemployment. That’s why our analysis found that, nationwide, nearly half of working low-income adults potentially subject to Medicaid work requirements couldn’t meet a 20-hour-per-week standard every single month.

    By taking away health coverage from working people with unstable jobs, Iowa’s policy might actually leave fewer people working. In Michigan and Ohio, working beneficiaries who gained coverage under the Affordable Care Act’s Medicaid expansion said it helped them maintain employment, while those without jobs said it helped them look for employment. Taking away access to regular health care, like prescriptions to control chronic conditions, can make it nearly impossible for many people to look for or hold a job. In Arkansas, news accounts have described working people losing their jobs after losing Medicaid coverage and access to needed medical care due to work requirements.

  • People with disabilities and other serious health needs. Sixty percent of Iowa’s non-elderly Medicaid adult enrollees report having a disability or other serious health condition but don’t receive Supplemental Security Income. Exemptions won’t protect this group from losing coverage because many of them won’t be able to prove that they qualify — getting physician testimony, medical records, or other required documents may be difficult, especially if beneficiaries don’t have health coverage while trying to prove they’re exempt. Studies of state Temporary Assistance for Needy Families (TANF, or cash assistance) programs and SNAP (food stamps) have found that people with disabilities, serious illnesses, and substance use disorders are disproportionately likely to lose benefits, even when they should be exempt. 

    And when they lose coverage, the harm to their health is especially great. As the American Medical Association, the Catholic Hospital Association, and other provider and patient organizations recently wrote, “Discontinuing coverage for patients who have already been diagnosed with cancer or another chronic disease can be nothing short of catastrophic. . . . This care saves lives. Uninsured patients with cancer, diabetes, and heart disease have much worse survival rates than insured patients suffering from the same diseases.”

  • Adults in rural areas. Medicaid plays an important role in rural areas, covering nearly 1 in 4 non-elderly adults. Meeting Iowa’s work requirement will be especially difficult in rural parts of the state, with their higher unemployment. Moreover, rural Iowans may have particular trouble reporting their hours under a work requirement because broadband access is lower in rural areas.

    Rural residents already have higher rates of chronic health conditions and worse physical and mental health than their urban counterparts; taking away their Medicaid coverage would make it harder to access care and worsen health outcomes. Moreover, work requirements hurt hospitals by increasing the amount of uncompensated care they provide, research shows. This likely poses a particular challenge for rural hospitals, which already face a declining rural population, higher poverty rates, and less private insurance.

  • Parents and their children. The bill’s work requirements would apply to parents of children over age 6. Taking away parents’ coverage makes families less financially secure by putting them at risk of significant medical debt. What’s more, when parents lose coverage, their children are at greater risk of going uninsured. Making sure parents stay covered and healthy is also important for their children’s long-term development: children’s relationships with their parents can influence their brain structure and function, mitigating the effects of adverse childhood experiences, including poverty.

  • Older adults. The bill’s work requirements would apply to people up to age 64. People in their 50s and 60s are less likely to work, in large part because they’re more likely to have serious, chronic health conditions, including heart disease, diabetes, or back pain. These conditions are even more common among lower-income older adults. And as AARP and other advocacy groups have explained, exemptions won’t keep some older enrollees who can’t work from losing coverage.

The bill would also pose major administrative challenges for Iowa, especially coming on top of the state Medicaid program’s troubled transition to managed care three years ago. For example, the provision requiring people not meeting the work requirement to enroll in a limited-benefit plan would require further changes to a managed care program that’s still a work in progress. If the state can’t implement these changes well, including by notifying thousands of beneficiaries of changes in their plan, the bill would even likelier have unintended consequences.