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Commentary: As Predicted, Arkansas’ Medicaid Waiver Is Taking Coverage Away From Eligible People

UPDATED
June 28, 2019

Arkansas’ Medicaid waiver provides direct evidence of the effects of taking away Medicaid coverage for not meeting work requirements. Unfortunately, it corroborates the most pessimistic projections.

Between June 2018 and March 2019, Arkansas required some enrollees to document that they worked or engaged in other work activities (e.g., job training or volunteer work) for at least 80 hours per month, unless they reported that they qualified for limited exemptions. In March 2019, a federal district court vacated the Department of Health and Human Services’ (HHS) approval of Arkansas’ waiver and a similar waiver in Kentucky, thereby preventing these two states from continuing to implement work requirements and other policies. The Trump Administration is appealing the decision and continuing to approve similar waivers in other states.

Before Arkansas began implementing its policy, we and others predicted that it would lead to large coverage losses, including among beneficiaries who are eligible but get tripped up by red tape, and would not meaningfully increase employment.[1] But since work requirements were unprecedented in Medicaid, we based our initial predictions of the policy’s effects on evidence from other types of eligibility restrictions and from work requirements in other federal programs. Here’s how those predictions stack up against the data.

Over 18,000 Beneficiaries Lost Coverage in 2018 Due to New Requirements — Almost 1 in 4 People Subject to New Rules

The 18,164 people who lost coverage make up 23 percent of beneficiaries subject to the policy in 2018, even higher than the 15 percent coverage loss Kentucky projected would result from its waiver by the fifth year and the 6 to 17 percent coverage loss that Kaiser Family Foundation researchers forecasted could result from implementing work requirements nationwide.[2]

If Arkansas were to continue implementing the policy, the coverage losses would likely grow. When the court effectively halted the state’s waiver, Arkansas was in the process of extending the policy to 45,000 beneficiaries aged 19-29 and to people with incomes between 100 and 138 percent of the poverty line. In 2018, the policy applied only to beneficiaries aged 30-49 and to those below the poverty line.

Uninsured Rate Rose Sharply Among Low-Income Adults Subject to Policy

A study by Harvard researchers finds that the uninsured rate among low-income Arkansans aged 30-49 rose from 10.5 percent in 2016 to 14.5 percent in 2018, after the Medicaid policy took effect. There was no similar increase for low-income Arkansans of other ages or for low-income people aged 30-49 in other, similar states.[3] This finding directly refutes claims, for example from HHS Secretary Alex Azar, that most people leaving Medicaid due to the policy did so because they found jobs with health insurance.[4]

Number Losing Coverage Exceeded Supposed Target Population: Beneficiaries Not Working or Eligible for Exemptions

Studies estimate that around 3 or 4 percent of those subject to the work requirement were not working and did not qualify for exemptions.[5] Yet each month, 8 to 29 percent of those subject to the requirement failed to report sufficient work hours, many of them not reporting any hours. And over 75 percent of those required to report hours — that is, those who were not automatically exempted by the state — failed to do so each month.

News accounts corroborate that eligible people lost coverage.[6] For example, one working beneficiary with a chronic condition explained that he lost his Medicaid coverage and then could not afford medications, which in turn caused him to lose his job due to his deteriorating health. Another reported rationing her medication after being unable to navigate the reporting requirement and losing coverage, despite working 25 to 35 hours each week — which equates to well over the monthly minimum.

Beneficiaries Faced Many Challenges Complying, Including State Web Portal

Many rightly criticized Arkansas’ decision to initially restrict reporting to an online portal. More than 20 percent of Arkansas beneficiaries lack internet access, and another 20 percent have no broadband access.[7] In addition, Arkansas’ web portal was unavailable from 9 p.m. to 7 a.m. each day, was not mobile friendly, was not accessible for those with certain disabilities, and required a complex login procedure.

But while Arkansas later added a phone reporting option, that did not eliminate the hurdles the policy created for eligible beneficiaries.[8] These include:

  • Complex rules creating significant confusion among beneficiaries. Nearly half the population subject to the work requirement reported that they were unsure whether the requirement applied to them, while another third said they had heard nothing about it, a recent study found.[9] Some beneficiaries apparently believed, incorrectly, they could maintain their coverage by reporting work hours just once, rather than every month. Also, clients could only count up to 40 hours of job search each month, but several beneficiaries reported over 80 hours of job search for November. These beneficiaries likely thought they were complying as they diligently looked for work and reported their hours but were not actually within the confines of the rigid policy.
  • Lack of staff support. The state didn’t hire additional staff to answer questions or make accommodations for individuals with disabilities. Arkansas Human Services Director Cindy Gillespie justified the lack of additional staff by saying, “If you implement [work requirements] in the old-fashioned way of ‘Come into our county office,’ we would have to hire so many people — and that just doesn’t make sense.”[10] But the state’s failure to invest in staff and other resources to support enrollees who should be exempt or need help complying with the requirements created a bureaucratic maze that caused many eligible enrollees to lose coverage.
  • Insufficient and ineffective outreach. The state conducted much of its outreach through social media and online videos, which failed to reach much of the population without access to computers or the internet. And although the state — along with health plans, providers, and advocates — also conducted other outreach efforts to educate beneficiaries about the new work requirement, these efforts failed to reach many enrollees, often due to inaccurate phone numbers in case files.[11]

Arkansas Failed to Protect People with Disabilities

While the Centers for Medicare & Medicaid Services (CMS) notified states of their responsibility to comply with the Americans with Disabilities Act, we and others warned that protecting people with disabilities would be impossible.[12] Indeed, Arkansas didn’t adequately explain beneficiaries’ rights under the Act, and it lacked a comprehensive system for providing reasonable modifications to protect people with disabilities, such as modifying the hourly requirement or providing support to help people meet the reporting requirement.[13] Due to the lack of protections and the design of the work requirement itself, individuals with disabilities lost coverage and may face serious harm as a result. In fact, “people with disabilities were particularly vulnerable to losing coverage under the Arkansas work and reporting requirements, despite remaining eligible,” a Kaiser Family Foundation study concluded.[14]

Data Don’t Show Employment Gains Due to Work Requirements

Nearly all of the beneficiaries who met the requirement by working were automatically deemed compliant because they were already working before the rules took effect or because they complied with work requirements under SNAP (formerly food stamps), which were also already in place. Only the group that had to report hours each month faced any new work incentive due to the policy. And of that group, only a few hundred each month met the requirement by reporting sufficient work hours, the state reports.[15] What’s more, many of them likely would have found jobs anyway.

Arkansas released data in March 2019 showing that of the 18,164 beneficiaries who lost coverage in 2018 for not complying with the work requirement, 1,981 had matches in the state’s New Hire Database, indicating they found new work. That means that for the more than 16,000 others who lost coverage, there is no evidence that they found new work. Moreover, these data almost certainly overstate the number of those losing Medicaid who found steady employment, because of limitations of the database. For example, the New Hire Database includes individuals who were employed for only hours or days — it doesn’t show whether the new jobs are full or part time or if they’re seasonal or permanent, or if the new employee was previously unemployed or just changed jobs.[16]

Similarly, the Harvard researchers’ study cited above found no significant increases in employment, number of hours worked, or overall rates of community engagement activities among those subject to the work requirement.[17]

These data are consistent with focus group interviews showing that the work requirement didn’t changing most beneficiaries’ behavior. Beneficiaries already had enough reasons to work: they needed to pay their bills. But they often struggle with unstable work hours, live in rural areas with few jobs, or face other barriers to employment — and the state didn’t invest any new money in job training programs, services to address barriers, or supports like transportation to help beneficiaries connect to jobs.[18] The Arkansas data are also consistent with evidence that work requirements in other federal programs have had limited effects on employment.[19]

Few Beneficiaries Who Lost Coverage Re-Enrolled This Year

Individuals who lost coverage last year could have re-enrolled effective January 1, but only about 4,300 of the more than 18,000 who lost coverage had done so as of mid-May, according to the state.[20] Most losing coverage (many of whom didn’t even know they were subject to the work requirement) are likely unaware that they are again eligible or may struggle to navigate the application and verification process. Or, fearing another loss of coverage for non-compliance with the requirement, some residents may be waiting to enroll until they need coverage more.

Arkansas’ experience should serve as a warning to other states about the human toll of taking coverage away from people who can’t meet rigid work requirements. No matter how they’re implemented, all work requirements will have unintended and harmful consequences — most notably, taking coverage away from people who are already working or should be exempt. These fundamentally flawed policies can’t be fixed.[21]

End Notes

[1] Jennifer Wagner and Judith Solomon, “States’ Complex Medicaid Waivers Will Create Costly Bureaucracy and Harm Eligible Beneficiaries,” Center on Budget and Policy Priorities, May 23, 2018, https://www.cbpp.org/research/health/states-complex-medicaid-waivers-will-create-costly-bureaucracy-and-harm-eligible; Hannah Katch, Jennifer Wagner, and Aviva Aron-Dine, “Taking Medicaid Coverage Away From People Not Meeting Work Requirements Will Reduce Low-Income Families’ Access to Care and Worsen Health Outcomes,” Center on Budget and Policy Priorities, updated August 13, 2018, https://www.cbpp.org/research/health/taking-medicaid-coverage-away-from-people-not-meeting-work-requirements-will-reduce.

[2] For data availability reasons, we calculate the coverage loss percentage as the total cases terminated as of January (18,164) as a share of the cases subject to the work requirement in September (after all four groups were phased in) plus the number of cases terminated effective September 1. This calculation approximates the reduction in January enrollment, compared to a counterfactual in which the work requirement had not been implemented. (Both the numerator and denominator likely include some people who would have left the program by January even absent the work requirement.) Kentucky HEALTH §1115 Demonstration Modification Request, Commonwealth of Kentucky, July 3, 2017, https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ky/ky-health-pa2.pdf; Rachel Garfield, Robin Rudowitz, and MaryBeth Musumeci, “Implications of a Medicaid Work Requirement: National Estimates of Potential Coverage Losses,” Kaiser Family Foundation, June 27, 2018, https://www.kff.org/medicaid/issue-brief/implications-of-a-medicaid-work-requirement-national-estimates-of-potential-coverage-losses/.

[3] The other states included in the study are Kentucky, Louisiana, and Texas. Benjamin Sommers et al., “Medicaid Work Requirements — Results from the First Year in Arkansas,” New England Journal of Medicine, June 2019, https://www.nejm.org/doi/full/10.1056/NEJMsr1901772.

[4] Dan Diamond, “Alex Azar’s confusing claim on Medicaid work requirements,” Politico, March 15, 2019, https://www.politico.com/newsletters/politico-pulse/2019/03/15/alex-azars-confusing-claim-on-medicaid-work-requirements-546844.

[5] Anuj Gangopadhyaya et al., “Medicaid Work Requirements in Arkansas,” Urban Institute, May 24, 2018, https://www.urban.org/research/publication/medicaid-work-requirements-arkansas; see also Sommers 2019, op cit.

[6] “With new work requirement, thousands lose Medicaid coverage in Arkansas,” PBS News Hour, November 19, 2018, https://www.pbs.org/newshour/show/with-new-work-requirement-thousands-lose-medicaid-coverage-in-arkansas; Benjamin Hardy, “Locked out of Medicaid — Arkansas’s work requirement strips insurance from thousands of working people,” Arkansas Times, November 19, 2018, https://www.arktimes.com/arkansas/when-arkansas-works-doesnt/Content?oid=25890378.

[7] Anuj Gangopadhyaya et al., “Under Medicaid work requirements, limited internet access in Arkansas may put coverage at risk,” Urban Institute, October 29, 2018, https://www.urban.org/urban-wire/under-medicaid-work-requirements-limited-internet-access-arkansas-may-put-coverage-risk. Data are for non-elderly, non-disabled Medicaid recipients aged 19-49, the population subject to the work requirement.

[8] Arkansas Department of Human Services, “DHS Expanding Phone Reporting, Outreach for Arkansas Works Enrollees,” December 12, 2018, https://t.e2ma.net/message/rur8vc/fhtrhs.

[9] Sommers 2019, op cit.

[10] Benjamin Hardy, “Medicaid advocate criticizes Arkansas Works’ email-only reporting for work requirements,” Arkansas Times, April 28, 2018, https://www.arktimes.com/ArkansasBlog/archives/2018/04/28/medicaid-advocate-criticizes-arkansas-works-email-only-reporting-for-work-requirements.

[11] MaryBeth Musumeci, Robin Rudowitz, and Cornelia Hall, “An Early Look at Implementation of Medicaid Work Requirements in Arkansas,” Kaiser Family Foundation, October 2018, http://files.kff.org/attachment/Issue-Brief-An-Early-Look-at-Implementation-of-Medicaid-Work-Requirements-in-Arkansas.

[12] “Taking Away Medicaid for Not Meeting Work Requirements Harms People with Disabilities,” Center on Budget and Policy Priorities, updated December 10, 2018, https://www.cbpp.org/sites/default/files/atoms/files/1-26-18health.pdf.

[13] Anna Bailey and Judith Solomon, “Medicaid Work Requirements Don’t Protect People With Disabilities,” Center on Budget and Policy Priorities, November 14, 2018, https://www.cbpp.org/research/health/medicaid-work-requirements-dont-protect-people-with-disabilities.

[14] MaryBeth Musumeci, “Disability and Technical Issues Were Key Barriers to Meeting Arkansas’ Medicaid Work and Reporting Requirements in 2018,” Kaiser Family Foundation, June 11, 2019, https://www.kff.org/medicaid/issue-brief/disability-and-technical-issues-were-key-barriers-to-meeting-arkansas-medicaid-work-and-reporting-requirements-in-2018/.

[15] Arkansas Department of Human Services, ARWorks Reports, https://humanservices.arkansas.gov/newsroom/toolkits.

[16] Jennifer Wagner, “New Arkansas Data Contradict Claims That Most Who Lost Medicaid Found Jobs,” Center on Budget and Policy Priorities, March 19, 2019, https://www.cbpp.org/blog/new-arkansas-data-contradict-claims-that-most-who-lost-medicaid-found-jobs.

[17] Sommers 2019, op cit.

[18] MaryBeth Musumeci, Robin Rudowitz, and Barbara Lyons, “Medicaid Work Requirements in Arkansas: Experience and Perspectives of Enrollees,” Kaiser Family Foundation, December 18, 2018, https://www.kff.org/medicaid/issue-brief/medicaid-work-requirements-in-arkansas-experience-and-perspectives-of-enrollees/.

[19] LaDonna Pavetti, “TANF Studies Show Work Requirement Proposals for Other Programs Would Harm Millions, Do Little to Increase Work,” Center on Budget and Policy Priorities, November 13, 2018, https://www.cbpp.org/research/family-income-support/tanf-studies-show-work-requirement-proposals-for-other-programs-would.

[20] Harris Meyer, “More Arkansans uninsured, unemployed post-Medicaid work requirement,” Modern Healthcare, June 19, 2019, https://www.modernhealthcare.com/medicaid/more-arkansans-uninsured-unemployed-post-medicaid-work-requirement.

[21] Judith Solomon, “Medicaid Work Requirements Can’t Be Fixed,” Center on Budget and Policy Priorities, January 10, 2019, https://www.cbpp.org/research/health/medicaid-work-requirements-cant-be-fixed.