Medicaid Health Plans of America CEO: States must consider hidden costs of work requirements

Filling out job application
Medicaid Health Plans of America is concerned that making employment a condition of eligibility for Medicaid will have consequences that states haven’t considered. (Getty/AndreyPopov)

The leader of the largest trade group for Medicaid health plans wants states to think twice before enacting work requirements for beneficiaries of the public insurance program.

“We’re happy to support them, but I think there is real interest in thinking through how much value this is actually going to have, and do states really understand the risks if they choose to go down this route,” Jeff Myers, president and CEO of Medicaid Health Plans of America (MHPA), tells FierceHealthPayer.

Unlike the Obama administration, the Trump administration has encouraged states to apply for waivers that would allow them to make conservative policy changes to their Medicaid programs—especially those that tie employment status to eligibility for benefits. At least seven states have applied to do so, according to the consulting firm Manatt Health.

This week, Centers for Medicare & Medicaid Services Administrator Seema Verma sent an even clearer signal to states by unveiling newly streamlined policies for Medicaid waivers, plus a new webpage that outlines a “broader view of Section 1115 demonstrations.”

“CMS believes that meaningful work is essential to beneficiaries’ economic self-sufficiency, self-esteem, well-being and health of Americans,” she said.

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But while encouraging people to work is undeniably positive, Myers says, he and MHPA’s member plans worry that making employment a condition of eligibility for Medicaid will have consequences that states haven’t considered.

For one, Myers points to research from the Kaiser Family Foundation, which found that most of those eligible for Medicaid who can work are already working. And many of those who are employed, he says, have minimum-wage positions that aren’t necessarily full-time or last the full year, meaning they might cycle in and out of Medicaid eligibility.

“That will obviously interrupt care management that the plans have built for chronic conditions that actually cost the state a lot of money,” he adds.

Further, individuals who drop in and out of the labor market are more likely to have either behavioral health or substance use disorder issues. If they lose access to treatment, they could end up in the criminal justice system, ultimately leading to higher costs and worse outcomes.

The same goes for people who have chronic conditions. If they lose their job—and Medicaid eligibility—their risk of developing a major health problem doesn’t disappear.

“And ultimately, when they have that health problem, someone is going to have to pay for it,” Myers says.

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Besides the potential ripple effect on costs, MHPA is also concerned about how states might go about implementing their new work requirement policies. Myers says it’s critical that states—not health plans—build the infrastructure to check whether Medicaid enrollees are doing what’s necessary to remain eligible under the new regulations. Because private plans historically don’t handle Medicaid enrollment, asking them to take on that burden would be both challenging and expensive.

Given the wealth of data that they have on low-income populations, MHPA’s member plans are already working with state legislators to help them understand some of the implications of Medicaid work requirements, according to Myers. The trade group is also looking into bringing that data together to offer a broader view of the impact of such policies.

Beyond the work-requirement debate, Myers notes that there is considerable enthusiasm among Medicaid managed care plans about the Trump administration’s support of more flexibility for insurance benefit and network designs. Private plans—which are covering an ever-larger part of the Medicaid population—can be an “engine of innovation” for states looking to take up Verma’s call to drive better outcomes and increase value for beneficiaries, he says. The caveat, though, is to ensure that good intentions don’t fall victim to bad execution.

“We continue to be concerned that state flexibility not be a code word for not-actuarially sound rates, or shifting risk that isn’t financially manageable over time,” Myers says. “It’s a good thing they’re looking at that—the question is what does it mean in true implementation.”