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Michigan’s Medicaid Proposal Would Harm Low-Income Workers — And Can’t Be Fixed

The Michigan House is now considering a bill, which the Senate has passed, that would take coverage away from Medicaid beneficiaries who don’t meet rigid work requirements. As our recent report explained, such a policy would jeopardize the large gains in coverage and access to care Michigan has achieved since expanding Medicaid through the Healthy Michigan program in 2014. It also would likely have serious unintended consequences, from cutting large numbers of working Michiganders off their coverage to sharply increasing uncompensated care costs for Michigan hospitals.

Some Michigan policymakers (including the sponsor of the Senate bill) have suggested that the House will modify the bill, such as by lowering the weekly work requirement from 29 hours or modifying exemptions, in order to gain support in that chamber. Yet any bill that retains the Senate bill’s core structure — in which people lose their coverage if they don’t complete and document work activities — will have the same harmful impacts.

Specifically, the Michigan bill, or any similar proposal, would:

  • Lead to large coverage losses. If the Michigan House lowers the hours-per-week requirement, it would only make it similar to the work requirement approved in Kentucky, which projects large coverage losses. To provide a sense of magnitude, Kentucky estimates that its Medicaid waiver, which requires 20 hours of work or related activities each week, will ultimately lead to a 15 percent drop in adult Medicaid enrollment. A comparable coverage reduction in Michigan would be about 150,000 people.

    An additional feature of the Michigan bill — that anyone who lost coverage for failing to meet the requirements could not regain it for a full year — is not in Kentucky’s proposal and would lead to additional coverage losses in Michigan.

  • Harm working Medicaid beneficiaries. The industries that commonly employ Medicaid beneficiaries — such as health care services, restaurant and food services, and construction — generally feature variable hours, above-average levels of involuntary part-time work and irregular scheduling, and minimal flexibility. As a result, any illness, family emergency, or child care or transportation disruption can lead to job loss or work hours that fluctuate sharply from month to month. Some enrollees in Michigan are seasonal workers in the state’s tourism industry, working substantial hours but often unable to find year-round work.

    We’ve shown that 46 percent of low-income workers nationwide who could be affected by Medicaid work requirements would be at risk of losing coverage for one or more months under a 20-hour-per-week requirement. Even among people working 1,000 hours over the course of the year — about 80 hours per month (thus 20 hours per week) — 1 in 4 would be at risk of losing coverage for one or more months because they wouldn’t meet the 80 hours in every month.

  • Harm people with disabilities and other vulnerable groups. The Michigan bill, like proposals in other states, exempts people who are medically frail or have medical conditions that prevent them from working. Still, some people with disabilities and serious illnesses would inevitably fall through the cracks and lose coverage. This could occur because they don’t meet the criteria for limited exemptions, don’t understand that they qualify for an exemption, or struggle to provide the documentation proving that they qualify. Bearing out these concerns, studies of state SNAP (formerly food stamps) and Temporary Assistance for Needy Families (TANF) programs have found that people with disabilities, serious illnesses, and substance use disorders may be disproportionately likely to lose benefits due to work requirements, even when they should be exempt.

    As the American Cancer Society, the American Heart Association, the American Lung Association, and other patient groups in Michigan explained, “Even enrollees who qualify for exemptions will have to provide documentation of their illness during the application and reassessment process, creating opportunities for administrative error that could jeopardize their coverage. No criteria can circumvent this problem and the serious risk to the health of the people we represent.”

  • Create new state costs. Michigan would have to spend between $20 million and $30 million a year to administer a work requirement, the Michigan Senate Fiscal Agency estimates. This estimate is mostly a function of the size of the population affected, the Fiscal Agency says, which means that the time and cost to regularly verify each person’s eligibility under the new requirements would be the same regardless of the bill’s specific requirements. The Fiscal Agency also noted that coverage losses under the bill “could lead to an increase in uncompensated care, especially at hospitals. This would lead to a negative State or local fiscal impact for public hospitals.”

Medicaid expansion in Michigan has produced large coverage gains, a sharp drop in the amount of uncompensated care its hospitals provide, and savings to the state’s budget. A Medicaid work requirement could reverse much of this progress.

Michigan policymakers should instead note the evidence showing that expanding coverage supports work and reject any proposal that imposes a work requirement on Medicaid beneficiaries.