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Biden Directs Federal Agencies to Reconsider Trump Policy Under Which Thousands Lost Medicaid Coverage

Update, January 28: we’ve updated this post to clarify that the Trump Administration approved 13 proposals from 12 states.

The Biden Administration today released an executive order directing federal agencies to “reconsider rules and other policies that limit Americans’ access to health care and consider actions that will protect and strengthen that access.” The order specifically requires the Department of Health and Human Services to re-examine a Trump Administration policy encouraging states to take Medicaid coverage away from people who don’t meet harsh work requirements, which led to large coverage losses but didn’t increase employment. The Department should act quickly to rescind this policy.

Under the Trump policy, announced in 2018, states could submit proposals for demonstration projects letting them take coverage away from people who didn’t document that they worked or participated in work activities like job training for a specified number of hours each month — something that the federal government never previously permitted. The Trump Administration approved proposals from 12 states, though only Arkansas fully implemented its demonstration (until a federal court struck it down). In the seven months that the Arkansas policy was in effect, more than 18,000 people — nearly 1 in 4 of those subject to the new rules — lost their coverage.

Other states, too, would have suffered large coverage losses if they had fully implemented their demonstration projects. New Hampshire was on track to take coverage away from nearly 17,000 people — about 40 percent of those subject to the pending rules — before state policymakers on a bipartisan basis halted the policy. Similarly, some 80,000 Michiganders — nearly 1 in 3 of those subject to work requirements — were in danger of losing coverage if a court hadn’t stopped the policy. In all three states, the number of people who lost or were set to lose coverage exceeded estimates of the presumed target population: people who weren’t working or eligible for an exemption. This indicates that working people and people who should have been exempt from the new rules almost certainly lost or risked losing coverage due to red tape.

Large coverage losses, including among people who are working or who should be eligible for exemptions, are unavoidable under these policies. People with disabilities and other serious health needs — especially mental health conditions or substance use disorders — lose coverage because they struggle with paperwork to claim exemptions. Working people lose coverage due to both paperwork barriers and the nature of low-wage work, like fluctuating hours. (That’s why nearly half of working low-income adults wouldn’t be able to document at least 80 hours of work each month, as many state demonstrations required.) And when people lose coverage, they face financial hardship and lose access to medications and other needed care, which can be catastrophic for those with chronic physical or mental health conditions.

Taking away coverage also fails to help people find and keep jobs. One study found evidence that people losing Medicaid under Arkansas’ policy became uninsured, but no evidence that the policy increased employment. That’s likely because Medicaid supports work: most people gaining coverage in Michigan and Ohio through the Affordable Care Act’s Medicaid expansion say the coverage made it easier for them to work or look for work. A tragic example from Arkansas shows that state work policies can have the opposite impact: a working beneficiary misunderstood the new reporting requirements, lost his coverage, couldn’t fill a prescription, and lost his job due to deteriorating health.

To execute today’s action, the Department of Health and Human Services should quickly rescind the Trump Administration’s letter to states encouraging work requirement policies, revoke approval for those state policies where they are in effect, and petition the Supreme Court to dismiss pending litigation on this matter, since the policy is no longer in effect anywhere.