Alabama Medicaid Work Requirements Force Parents Into No-Win Situation, Policy Center Says

Alabama’s proposed plan to institute work requirements in order to obtain Medicaid benefits would fall heavily on mothers, African Americans, and families living in rural communities, according to an analysis by an independent, nonpartisan policy and research center. And because the state has not expanded Medicaid as allowed under the Affordable Care Act (ACA), the work requirement would apply only to extremely poor parents.

The Georgetown University Center for Children and Families (CCF) said the work requirement—ranging from 20 to 35 hours—would create a “Catch-22” situation, where most people would make too much money to qualify for Medicaid, but not enough to afford private insurance.

This would cause 8700 parents to lose Medicaid health benefits in the first year alone, by the state’s own estimates, CCF said.

Alabama is seeking CMS permission through a Section 1115 Medicaid demonstration waiver to require beneficiaries who rely on Medicaid to work 20 to 35 hours a week, prove they are looking or training for a job, or do community service before receiving benefits.

The proposal requires the poorest parents to work at least 35 hours a week—or 20 hours a week if they have children under age 6.

At Alabama’s minimum wage, working 35 hours a week would amount to an annual income of $13,195. At 20 hours, it would be $7540. Both would be too high to qualify for Medicaid, CCF said.

Earlier this year, HHS was sued by the Southern Poverty Law Center and other groups over its waiver approval for the state of Kentucky. In Kentucky, the state sought to modify its expansion program by allowing work requirements; the lawsuit claims that there will be substantial coverage losses as a result.

This proposal targets the very poorest and most vulnerable families with children in Alabama, CCF said. The loss of health coverage would have a spiraling effect, CCF said, where children would go without healthcare, and family debt would increase.

Their analysis of parents who rely on Medicaid for health coverage in Alabama found that:

• 85% are women
• 60% are not in the workforce, in many cases because they are caregivers or have an illness or disability
• 24% describe themselves as unemployed
• 58% are African American
• 40% are white
• 35% are young parents under age 30

Overall, families in Alabama’s rural areas are more likely to be affected because Medicaid covers a larger share of them—14% of adults versus 11% in urban areas.

When these parents lose Medicaid, they would likely lose health coverage, CCF said. Less than a quarter of Alabama's adults living below the poverty line are covered by employer-sponsored insurance. Even if they are eligible for an employer-sponsored plan, they likely will not be able to afford one, CCF said.

CCF also noted that Alabama is one of the first states to ask for a work requirement without accepting the Medicaid expansion provided under the ACA. That expansion allows adults with incomes slightly above the poverty line (138% of the federal poverty level) to receive Medicaid. Around 300,000 resident are caught in the coverage gap, earning too much to qualify for Medicaid but too little to qualify for subsidies for ACA marketplace coverage.

In Alabama, only the poorest parents and caregivers, those making 18% of the poverty level or less—$3740 a year for a family of 3 or about $312 a month—now qualify. That is the strictest eligibility requirement in the nation, along with Texas.

The new requirement would also affect workers using Transitional Medical Assistance (TMA) by reducing TMA benefits from 12 to 6 months despite eligibility rules, which ensure that these beneficiaries are working more.

“This contradicts the stated goals of the state’s Section 1115 proposal and suggests that this aspect of the proposal is not about encouraging work but rather about cutting enrollment and Medicaid spending,” CCF wrote in a brief about the proposed policy.

CCF also said the proposal creates more barriers to health coverage, as there is no guarantee of new resources to help families with job training, transportation, or childcare assistance.

The report was also prepared by the Arise Citizens' Policy Project (ACPP), a nonprofit, nonpartisan coalition of congregations, organizations and individuals working on behalf of low-income residents in Alabama.