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Critics say Trump's plan to put Medicaid recipients to work is a bad idea. Here's why.

by Benjy Sarlin /  / Updated 

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WASHINGTON — In a major change in policy, the Trump administration is inviting states to attach work requirements to Medicaid that could potentially affect millions of low-income recipients. But the announcement sets up a much longer fight, with Democrats and patient advocacy groups already threatening legal action.

"For those who cannot find work, requiring unpaid volunteer work in exchange for health coverage is unconscionable legally and morally, recalling the days of workhouses for the poor," Eliot Fishman, senior director of health policy of Families USA, a consumer advocacy group, said in a statement. "Today's decision will likely be challenged in the federal courts."

On Thursday, the Centers for Medicaid & Medicare Services (CMS) released a letter inviting states to impose work and community service requirements on their Medicaid populations and describing what types of restrictions would be acceptable. States would first have to seek a Section 1115 waiver, a provision that allows the administration to approve experimental plans. The Obama administration rejected prior waiver requests from states to add work requirements.

"We look forward to working with states interested in testing innovative approaches to promote work and other community engagement, including approaches that make participation a condition of eligibility or coverage, among working-age, non-pregnant adult Medicaid beneficiaries who qualify for Medicaid on a basis other than a disability," the CMS letter said.

The administration argued in a letter to state Medicaid director from Brian Neale, director of the federal Medicaid office, that the changes would encourage recipients "to help individuals and families rise out of poverty and attain independence" and cited research that employed individuals have improved mental health.

"We have a labor force participation problem in the U.S. and part of it involves people who are in receipt of assistance and not working," Robert Doar, a fellow at the center-right American Enterprise Institute who researches poverty, told NBC News. "Not working is not in their best interest, not for their health or family or their poverty status, it leads them to be more likely to be poor. So why can't programs that provide important kinds of care do more than one thing at a time?"

Opponents of the decision have argued that work requirements go beyond Medicaid's stated goal to provide aid to low-income households and that only Congress can expand its objectives to also include pushing people toward employment. This is likely to be a primary contention in lawsuits challenging the administration.

"Medicaid's core mission is to provide comprehensive health coverage to low-income people so they can get needed health services," Hannah Katch a senior analyst at the left-leaning Center on Budget and Policy Priorities, wrote in a blog post responding to the decision. "Section 1115 of the Social Security Act allows states to deviate from certain federal Medicaid requirements, but only when necessary to implement demonstration projects that promote Medicaid’s objectives."

Democrats and health care advocacy groups have long opposed work requirements on policy grounds as well, however, warning they would stigmatize Medicaid recipients and leave too many poor Americans uncovered and vulnerable to catastrophic medical costs or untreated health problems.

Some conservatives, like the Heritage Foundation's Robert Rector, have also opposed work requirements in the past, arguing people who lose coverage will likely cost the government more via unpaid emergency room bills.

Liberal critics of work requirements argue that depictions of Medicaid as filled with able-bodied employable individuals who need a nudge to find a job is inaccurate.

An analysis by the nonpartisan Kaiser Family Foundation last year found that eight in 10 non-elderly Medicaid recipients were in working families in 2016 with about six in 10 working themselves, leaving an estimated 9.8 million Medicaid recipients who were not working. But within this group, the vast majority reported they were either ill or disabled themselves, taking care of relatives, retired, or in school.

"It is stupid because it will actually prevent people from working — with health needs unattended, many low-income people will be unable to seek work," Robert Weissman, president of liberal advocacy group Public Citizen, said in a statement.

The CMS guidance indicated it would take some of these factors into account and suggested states should look at how changes would affect areas with high unemployment and large numbers of caregivers in particular. They also warned that states would need to find ways to manage people battling opioid addiction, perhaps by counting treatment for substance abuse towards a work requirements.

But Sara Rosenbaum, a professor at George Washington University who researches Medicaid and is critical of the proposed changes, said the new guidelines were "very vague" and contained few "bright lines" that would discourage states from far-reaching proposals. The letter left out whether states could require frequent check-ins or updated paperwork from recipients, for example, and then cut off benefits if they fell behind.

States also could not use federal savings from covering fewer Medicaid recipients to finance programs that would help them beneficiaries work or go to school, despite asking states to pair any new work requirements with aid along these lines.

"They're basically saying the very things the state would have to do [to receive a waiver] do not further Medicaid’s objectives and thus won’t be allowed federal funding," Rosenbaum said.

This could potentially leave a lot of federal aid on the table. An analysis at the by Rosenbaum for the Commonwealth Fund on Thursday noted that several of the 10 states who had submitted work requirement plans projected they would reduce coverage. Kentucky, whose waiver request included some of the strictest proposals, predicted they would cover 15 percent fewer adults through Medicaid after five years.

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