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A public policy blog from AEI
This week, the Centers for Medicare and Medicaid Services (CMS) formalized what Administrator Seema Verma had suggested was coming last fall. In a letter to State Medicaid Directors, CMS announced a new policy designed to “improve Medicaid enrollee health and well-being through incentivizing work and community engagement among non-elderly, non-pregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability.” In brief, CMS will now consider state requests to implement work-related requirements for their workable Medicaid enrollees.
This policy is not the Trump administration implementing a Medicaid work requirement, as some have characterized it. Instead, it notifies states that CMS is willing to consider demonstration projects that implement work requirements or community engagement requirements for able-bodied Medicaid recipients. Section 1115 of the Social Security Act allows the Secretary of Health and Human Services to do this as long as it furthers an objective of the Act. CMS indicated they will approve appropriate waiver requests under the objective that it “improves the health and well-being of participants.”
Much debate surrounds work requirements in Medicaid, mostly centered on whether requirements will have positive effects (such as increased employment and better health) or negative ones (such as loss of Medicaid without employment). The truth is we do not know. Work requirements have not been tried in Medicaid, and existing research that helps us guess what might happen is mixed.
The closest existing policy to Medicaid work requirements is the requirement that non-disabled adults without caregiving responsibilities who receive SNAP (our country’s food assistance program) must meet a work requirement or face a time limit on benefits. Only a few studies have explored the impact of SNAP work requirements, with one finding no employment effects and another finding some positive effects — and both acknowledge that data problems limit their ability to study this question.
Research suggests that work-inducing public policies can have health benefits for adults, with the EITC as one example, suggesting that the Medicaid policy could improve health. But the only way to know with some level of certainty is to study it. CMS’s new policy provides this opportunity, as long as states have the capacity to follow it.
CMS’s guidance specifies that any state request for a demonstration project must include an independent program evaluation and implies they will only approve robust evaluations:
Evaluation designs will be expected to include analysis of how this requirement affects beneficiaries’ ability to obtain sustainable employment, the extent to which individuals who transition from Medicaid obtain employer sponsored or other health insurance coverage, and how such transitions affect health and well-being.
CMS goes even further by stating that the evaluation needs “to identify comparison groups and appropriate statistical analyses to evaluate the impact of the demonstration.” This means that states can’t simply track what happens to their Medicaid enrollees after implementing a work requirement. They must compare them to enrollees who were not subject to the work requirement and measure whether it led to better health or not.
This is a tall order for states, but also an opportunity to build evidence (one way or the other) for work requirements in Medicaid and other public programs. CMS has committed to a transparent process as they consider state waiver requests. For those interested in improving the health and well-being of low-income Americans, paying attention to how states propose to evaluate their demonstration projects will prove critically important.
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