Yes, Trump administration plan would improve the living standards of enrollees
By CHARLIE KATEBI
In recent years, states across the country have expanded Medicaid to millions of low-income Americans in an attempt to provide them with greater economic and health security. Instead, the program has made it harder than ever for impoverished individuals to gain employment and employer-based health insurance. Fortunately, the Trump administration recently unveiled a new policy to help Medicaid recipients move from dependency to self-sufficiency.
In January, the Department of Health and Human Services released guidance that allows states to introduce work requirements to Medicaid. Work requirements can come in many forms, but they typically require non-disabled individuals to undergo training, volunteer, or work at least 20 hours per week as a condition of receiving government assistance. Since January, four states have received approval from the Trump administration to implement these reforms, and another seven states are awaiting approval.
These changes would dramatically improve the living standards of Medicaid enrollees. A recent report from the White House Council of Economic Advisors found more than half of able-bodied adults on Medicaid do not work at all. In Illinois, 70 percent of able-bodied Medicaid recipients do not work.
The authors of the White House report explain that many Medicaid recipients choose not to work because the program discourages them from earning too much money. Since Medicaid benefits phase out as an individual’s income rises, the program effectively imposes a substantial tax on recipients who try to work. After President Barack Obama and the Democrat-led Congress expanded Medicaid through the Affordable Care Act, the Congressional Budget Office predicted 2 million individuals would “withdraw from the labor force to become or remain eligible” for the program by 2017.
Work requirements can play a crucial role in reversing Medicaid’s perverse incentives. In 1996, President Bill Clinton introduced similar changes to the Temporary Assistance for Needy Families (TANF) program, a government cash-assistance welfare program. After the new TANF work requirements took effect, welfare recipients sought to fill open jobs in massive numbers. Research shows these individuals increased their earnings by 136 percent. Further, the nonpartisan Manhattan Institute reports work requirements reduced the share of children living in poverty from 10 percent to 5 percent, and they reduced the share of children living in impoverished single-parent households from 20 percent to just 10 percent.
More recently, some states have strengthened these reforms for even greater success. In 2011, Kansas tightened penalties on TANF recipients who failed to comply with work requirements. including finance, health care, and information technology. Within four years, these individuals experienced a 247 percent wage increase, which translates to $48 million in additional income.
Work requirements would help Medicaid’s able-bodied recipients return to work in much the same way. The Council of Economic Advisors estimates these reforms would move more than 17 million able-bodied adults nationwide into productive jobs or training programs, where they would be able to develop the skills needed to find good jobs.
Critics of work requirements often argue there aren’t enough jobs available for welfare recipients, but that’s simply not true. There are nearly seven million job openings currently available, according to the Bureau of Labor Statistics. And as more individuals leave welfare and return to work, they will likely spur additional economic activity that will encourage employers to hire even more workers. Researchers at the Department of Agriculture estimate that every 2.4 million workers who move from welfare to work increase economic growth by 1.6 percent. In other words, work requirements will create even more jobs to help individuals exit Medicaid.
Opponents of work requirements also claim these policies push people off Medicaid without providing them reliable access to health care. But the truth is individuals who leave Medicaid routinely enroll in private, employer-sponsored insurance when they find work.
In 2005, Tennessee Gov. Phil Bredson decided to disenroll 170,000 able-bodied adults from the state’s Medicaid program. After these individuals left Medicaid, the vast majority of them returned to the labor force and obtained health insurance from their employers. A 2013 study by economists from Columbia University, University of Chicago, and Northwestern University found “a steady rise in both employment and health insurance coverage following (Tennessee’s Medicaid) disenrollment.”
Individuals not only obtain new insurance when they find work, they also gain better insurance. Because private insurers reimburse health-care providers at higher rates than Medicaid, doctors are far more willing to accept new patients with private coverage than those stuck with Medicaid. Surveys from the Centers for Disease Control and Prevention reveal nearly 30 percent of Illinois physician refuse to treat patients on Medicaid. By contrast, less than 5 percent of doctors refuse to treat individuals with private coverage.
Employer-based insurance is especially better than Medicaid for families seeking pediatric care. A 2011 study in the American Journal of Pediatric Care concluded parents with private insurance in Illinois are 18 times more likely than Medicaid recipients to find dental practices willing to treat their children with urgent dental conditions.
Despite Medicaid’s best intentions, the program imposes significant barriers on low-income families seeking employment and high-quality health insurance. Thankfully, states finally have the opportunity to implement commonsense work requirements that will expand opportunity and better coverage to the less fortunate.
Charlie Katebi is a state government relations manager who focuses on health care and welfare policy for The Heartland Institute, a nonprofit, nonpartisan public policy think tank. He wrote this column at the request of the Illinois Business Journal.