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Research & Commentary: Virginia Needs to Add Work Requirements to Medicaid

September 20, 2018

In this Research & Commentary, Matthew Glans examines Virginia's recent expansion of Medicaid and why the state needs to add work requirements to the program to manage costs and help move people through the program and back into the workforce.

In January 2019, Virginia will become the latest state to expand Medicaid, despite growing concerns about the rising costs of the Medicaid programs that other states have expanded in recent years. Under Virginia’s newly expanded program, about 395,000 additional Virginians will qualify for Medicaid. Virginia’s new eligibility rules will make Medicaid available to anyone who earns up to 138 percent of the federal poverty level, or about $33,948 for a family of four.

Virginia should consider meaningful reforms to Medicaid to help increase access to high-quality, more-affordable health coverage without increasing state budgets or the national debt. One important way to accomplish this goal is to use Section 1115 waivers. 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 more flexibility to innovate and make significant changes to their Medicaid programs.

Virginia’s Medicaid expansion proposal was approved by the legislature in May with the condition the state applies for federal permission to include work requirements, but to date, no waiver has been submitted to HHS, nor has a bill calling for a waiver been passed by the legislature. One bill that received the approval of the state’s House of Representatives during the 2018 session would require Medicaid recipients to participate in work activities, but it provides exceptions for children, elderly, people suffering from certain disabilities, and individuals who are serving as the primary caregiver for a dependent.

The proposal requires enrollees to meet gradually escalating work participation requirements, beginning at five hours per week after enrollees have spent three months in the Medicaid program, culminating at 20 hours per week after 12 months of enrollment. The bill would also require Virginia Workforce Centers to provide the necessary training and job search services to enrollees.

The expected influx of new Medicaid recipients in Virginia makes including these requirements essential to maintaining a manageable budget.

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. According to the Robert Wood Johnson Foundation, a good-paying job often provides solid health benefits and makes it easier for workers to “live in healthier neighborhoods, provide quality education for their children, secure child care services, and buy more nutritious food—all of which affect health.”

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.”

Adding a work requirement for those who are physically able is popular with the public, too. Sixty-four percent of American adults think childless, able-bodied adults in their state should be required to work as a condition for receiving Medicaid, and just 22 percent disagree, with 14 percent not sure, according to a recent Rasmussen Reports national telephone and online survey. The survey was conducted on January 14–15, 2018. The margin of sampling error is +/- 3 percentage points with a 95 percent confidence level.

Finally, work requirements are desperately needed because Medicaid rolls are expanding faster than the program can handle. The number of able-bodied adults enrolled in Medicaid rose rapidly from 2013 to 2015, from fewer than 133,000 to more than 633,000. Further, government spending for this population rose by almost 500 percent from $667 million in 2013 to $4 billion in 2015.

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, Virginia and other states 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.

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 Lindsey Stroud, a state government relations manager at The Heartland Institute, at lstroud@heartland.org or 757/354-8170.

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