Medicaid Expansion Not a “Welfare Trap” Despite Report's Claim, Other Research Finds

The language of the report sounded alarming: Medicaid expansion, a hallmark of the Affordable Care Act (ACA), had created “a new welfare trap” for the 12 million newly eligible adult enrollees. “With no work requirement in place,” the report stated, “nearly 7 million of these expansion enrollees have no reported income.”

The July 12 paper from the Foundation for Government Accountability (FGA), illustrated on the group’s website with a photo of a young man lounging on a sofa, cell phone in hand, seeks to make the case for the Trump administration’s new policy that allows states to impose work or volunteer requirements for people receiving health insurance under Medicaid expansion.

To do so, the report culls raw data from several states, and reports high shares of enrollees not collecting a paycheck: 55% in Arkansas, 52% in Kentucky, 48% in Pennsylvania, and 70% in Illinois.

But there’s just one problem: as other reviews of the same data have found, many of those enrolled in Medicaid expansion while not collecting a paycheck would qualify for an exemption under waivers that have been approved in Kentucky, Indiana, New Hampshire, and Arkansas. The FGA report does not discuss this, and instead says that states that expanded Medicaid to households earning up to 138% of the federal poverty level are “siphoning away resources that could instead go to help the truly needy.”

An analysis by the Urban Institute (UI) of the Arkansas Works program, which took effect on June 1, 2018, found that that most of those targeted under the initiative are already working. As the UI report noted, CMS requirements call for exemptions for those involved in “qualifying activities,” which include job searches, skills training, education, volunteering, and caregiving. Pregnant women and the medically frail are also exempt. The UI report said even under a more aggressive definition set to take effect for 2019, only 15% of those enrolled in Medicaid expansion were “nonexempt and not working.”

Katherine Hempstead, senior policy adviser for the Robert Wood Johnson Foundation, examined the FGA report and told The American Journal of Managed Care^® in an email that the researchers had not netted out those who might be exempt from requirements. She cited Arkansas as an example. “The estimated share of enrollees who are both able to work and not working is far lower than that implied by the FGA report, which conveniently omits a lot of information related to the ability to work,” Hempstead said.

In May, the Kaiser Family Foundation published a review of 202 studies of Medicaid expansion, and found it had “positive or neutral” effects on work:

• No state-level studies found negative effects on employment or employee behavior.
• In Ohio, Medicaid expansion was found to be beneficial to those who were unemployed and looking for work.
• Several state-level studies predicted job growth following expansion, and Kentucky’s former governor had produced a report linking expansion with economic benefits.

Despite the FGA’s failure to account for exempted populations in its data, the report’s conclusions have appeared on websites that cite other parts of the report and call on Congress to require states to include Medicaid work requirements.

Hempstead said even though Medicaid is health insurance, there is an effort to portray it as welfare. “Clearly, the politics of late are to try to recast it as the latter, by saying that ‘able-bodied’ people should not be using Medicaid, when no one says this about subsidies on the ACA exchange or Medicare,” she said.

In Kentucky, a federal judge focused on Medicaid’s health insurance mission in blocking its waiver, saying the administration “never adequately considered whether Kentucky HEALTH would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

After the judge blocked Kentucky’s work requirements, Governor Matt Bevin cut vision and dental benefits from recipients. Kentucky’s program included “lockout” provisions that called for canceling benefits for those who failed to show they were engaging in work or volunteer activities.

FGA, based in Naples, Florida, and founded by former Maine legislator Tarren Bragdon, funds research that opposes safety net programs and occupational licensing, under the banner, “freedom to work.”

At press time, there was no response to an email to an FGA spokeswoman requesting comment.