Michigan Nearing Large Medicaid Coverage Losses Due to Work Requirements

Some 80,000 Michiganders are in danger of becoming uninsured beginning May 31 due to the state’s new policy of taking Medicaid coverage away from people who don’t meet a work requirement, Michigan Governor Gretchen Whitmer announced last week.

These data show Michigan is poised to experience the same harmful results from its work requirement policy as other states. In Arkansas, more than 18,000 people (nearly 25 percent of those subject to the policy) lost Medicaid coverage in 2018. In New Hampshire, almost 17,000 people (about 40 percent) would have lost coverage in 2019 if state policymakers hadn’t put the policy on hold.

January was the first month that non-exempt Michiganders had to report their work hours or claim an exemption, and 80,000 (or about 1 in 3 of those subject to the policy) failed to do so. People in this group who don’t report their work hours or claim an exemption for February or March will lose their coverage beginning May 31. State officials have estimated that, if the work requirement remains in effect, more than 100,000 people will lose coverage for at least part of 2020.

The early data from Michigan are especially notable because the state launched a major effort to help beneficiaries comply with the new policy. Michigan’s health department plans to spend at least $68 million to implement the program and conduct outreach to beneficiaries, and the Whitmer Administration worked with the legislature to secure some minor changes to the original policy that policymakers hoped would reduce coverage losses.

And yet, despite predictions to the contrary from the sponsor of the 2018 legislation that created Michigan’s work requirement, the state’s experience thus far has been similar to Arkansas’ and New Hampshire’s. In both of those states, evidence suggests that people who were working and people with serious health needs who should have been eligible for exemptions lost coverage due to red tape. Large numbers of beneficiaries in both states reported that they didn’t know about the work requirement or whether it applied to them.

Michigan officials have been sounding the alarm for months about the difficulty of contacting beneficiaries and making them aware of the new requirements. That’s further confirmation that work requirements can’t be fixed; any program that conditions Medicaid eligibility on reporting work hours will generate large coverage losses.

Michigan also created its work requirements program despite evidence that coverage itself has been a critical work support in the state. Most non-working adults who gained coverage through the Affordable Care Act’s Medicaid expansion said that having health care made it easier to look for work, a survey found, and most working adults said coverage made it easier to work or made them better at their jobs.

Michigan’s work requirement faces a court challenge, and the Whitmer Administration has intervened in the lawsuit to ask a federal judge to suspend Michigan’s program. A federal appeals court recently upheld an earlier district court decision that suspended Arkansas’ similar policy.

If Michigan begins ending coverage for people who don’t meet the work requirement, it will reverse the state’s well-documented progress since the Medicaid expansion coverage took effect in 2014. The expansion is the main reason why the state’s uninsured rate among people under 65 fell by half from 2013 to 2016, studies show. The expansion has improved access to care, detection of serious health conditions, and management of chronic health conditions, particularly among beneficiaries who were previously uninsured. It has also resulted in less debt sent to collectors, less past-due debt, and fewer people spending over their credit card limits. Finally, the expansion has saved lives, preventing an estimated 1,196 premature deaths among older Michiganders over four years. All of these gains would be at risk if the state takes coverage away from tens of thousands of people.