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Research & Commentary: Nebraska Should Approach Medicaid Expansion Warily

November 30, 2018

In this Research & Commentary, Matthew Glans discusses how Nebraska lawmakers should approach Medicaid expansion and the need for reforms like work requirements to be included in any expansion effort.

On Election Day, Nebraskans voted to expand the Cornhusker State’s Medicaid program, despite concerns over soaring costs in states that have expanded their Medicaid programs in recent years. The initiative will extend Medicaid coverage to an estimated 90,000 adults. Before it is officially enacted, the state legislature must decide how to fund and implement the expanded program. A conservative estimate of the state’s cost for the expansion is $19.8 million during the first fiscal year and $32.2 million in the second year.

As in many states, the cost of Oklahoma’s Medicaid program has been increasing at an unsustainable pace. Nebraska’s total Medicaid spending grew by 33 percent from fiscal years 2012 to 2016. During the 2017 fiscal year, combined federal and state spending for Nebraska’s Medicaid program totaled approximately $2 billion, according to the Kaiser Family Foundation.

Under provisions written into the original Medicaid law, state policymakers are able to apply for Section 1115 waivers from the U.S. Department of Health and Human Services (HHS), which, if approved, allow states flexibility to make significant changes to their Medicaid programs. As such, Nebraska lawmakers should pass a bill requesting permission to implement Medicaid work requirements.

Nebraska’s waiver should be modeled after those approved in Arkansas, Indiana, and Kentucky. In short, the waiver request would seek permission to implement a requirement mandating Medicaid recipients work, actively seek employment, participate in educational or training programs, or volunteer, for 20 hours per week. State policymakers would determine what qualifies as work and volunteer activity. The approved work requirement waivers should also contain exemptions for those who cannot work because of medical problems, children under the age of 19, and those who are 64 or older.

Work requirements for able-bodied adults without dependents (ABAWDs) are vital for states looking to ensure the long-term viability of their Medicaid program and helping people move from government dependence to self-sufficiency. A well-paying job is a far better way to help people live happy, healthy, and productive lives than making people comfortable in their unemployment.

Opponents of work requirements claim they force people off Medicaid without reliable access to health care, but the majority of individuals leaving Medicaid subsequently enroll in a private, employer-sponsored insurance plan, which offers much better benefits than Medicaid. According to the U.S. Bureau of Labor Statistics, medical care benefits were available to “69 percent of private industry workers and 89 percent of state and local government workers in March 2018.”

Medicaid should focus on encouraging able-bodied recipients who are enrolled in these programs to become more self-sufficient and less dependent on government aid. The real focus of these programs should be to provide temporary or supplemental assistance while encouraging work and independence. The Section 1115 waiver process gives states the flexibility they need to improve health care affordability and quality of care.

In addition to taking advantage of Section 1115 waivers, Nebraska should also work to repeal state regulations that are obsolete or counterproductive, such as certificate of need laws, thereby reducing costs that inevitably end up getting passed on to consumers.

The following documents examine Medicaid reform and expansion in greater detail.
 

Research & Commentary: States Pursue Work Requirements for Medicaid
https://www.heartland.org/publications-resources/publications/research--commentary-states-pursue-work-requirements-for-medicaid?source=policybot
Senior Policy Analyst Matthew Glans examines efforts by several states to add work requirements to their Medicaid programs. “Implementing Medicaid work requirements would be a good first step for Medicaid-expansion and non-expansion states toward helping to limit the rising costs of Medicaid,” Glans wrote.

Medicaid Expansion: A Bad Prescription for Nebraska
http://www.platteinstitute.org/Library/DocLib/Platte-Medicaid-Policy-Study-Final-020914.pdf
Jonathan Ingram and Nic Horton examine Medicaid expansion proposals in Nebraska and argue rather than creating a new entitlement for able-bodied adults, Nebraska lawmakers should instead “refocus their efforts on fixing the current program so that it works for patients and taxpayers. Medicaid was intended to be an affordable health care safety net for the truly vulnerable. Nebraska policymakers should focus on meeting this critical goal instead of undermining long-term reform with a short-sighted Medicaid expansion scheme.”

Medicaid Expansion: It’s Not a Jobs Bill, It’s a Hospital Bill
http://www.platteinstitute.org/research/detail/medicaid-expansion-its-not-a-jobs-bill-its-a-hospital-bill
Jessica Smith of the Platte Institute outlines four reasons why the promises of job creation made by Medicaid expansion have proven to be empty.

The Oregon Experiment—Effects of Medicaid on Clinical Outcomes
https://www.heartland.org/publications-resources/publications/the-oregon-experiment--effects-of-medicaid-on-clinical-outcomes?source=policybot
This article from The New England Journal of Medicine examines Medicaid outcomes in Oregon. Oregon gave researchers the opportunity to study the effects of being enrolled in Medicaid (compared to being uninsured) based on data from a randomized controlled trial, the “gold standard” of scientific research. The results showed no improvement in health for enrollees, but it did reveal better financial protections for patients and increased medical spending.

The Value of Introducing Work Requirements to Medicaid
https://www.americanactionforum.org/research/value-introducing-work-requirements-medicaid/
Ben Gitis and Tara O’Neill Hayes of the American Action Forum examine the value of work requirements and argue more work requirements are needed in other safety-net programs, including in Medicaid.

Don’t Wait for Congress to Fix Health Care
https://www.heartland.org/publications-resources/publications/dont-wait-for-congress-to-fix-health-care
Heartland Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs or submit even more ambitious requests for waivers to the Department of Health and Human Services, an option the Trump administration has encouraged.

Maine Food Stamp Work Requirement Cuts Non-Parent Caseload by 80 Percent
http://www.heritage.org/welfare/report/maine-food-stamp-work-requirement-cuts-non-parent-caseload-80-percent#_ftnref36
Robert Rector, Rachel Sheffield, and Kevin Dayaratna of The Heritage Foundation examine Maine’s food stamp reforms and discuss how they could act as a model for other states. “The Maine food stamp work requirement is sound public policy. Government should aid those in need, but welfare should not be a one-way handout. Able-bodied, nonelderly adults who receive cash, food, or housing assistance from the government should be required to work or prepare for work as a condition of receiving aid. Giving welfare to those who refuse to take steps to help themselves is unfair to taxpayers and fosters a harmful dependence among beneficiaries,” the authors wrote.

Welfare Reform Report Card: A State-by-State Analysis of Anti-Poverty Performance and Welfare Reform Policies
https://www.heartland.org/publications-resources/publications/2015-welfare-reform-report-card?source=policybot
In 2015, The Heartland Institute published an updated version of its Welfare Reform Report Card. This report card compiles extensive data on five “inputs” and five “outputs” of state welfare and anti-poverty programs and assigns a final grade to each state for its welfare policies.

The Work Versus Welfare Tradeoff: 2013
https://www.heartland.org/publications-resources/publications/the-work-versus-welfare-trade-off-2013-1?source=policybot
The Cato Institute estimates the value of the full package of welfare benefits available to a typical recipient in each of the 50 states and the District of Columbia. The study found welfare benefits outpace the income most recipients can expect to earn from an entry-level job, and the income gap between welfare and work may actually have grown worse in recent years.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Arianna Wilkerson, government relations coordinator at The Heartland Institute, at awilkerson@heartland.org or 312/377-4000.

Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR