Why state leaders needed to step back from work requirements

State work requirements for Medicaid recipients appear to be scuttled, at least for this year. That’s a good thing because research and experience show the numbers don’t add up for participants or for taxpayers.

The bill passed by the Iowa Senate, Senate File 538, required the Department of Human Services to petition the federal government for permission to implement Medicaid requirements beyond those already in place at the federal level. Those new stipulations centered on work requirements. Specifically, “able-bodied” recipients would need to work or volunteer a minimum of 20 hours each week, and government officials would need to make larger investments in software and staffing in order to track the changes with the increased veracity required by the bill.

Sticks of chalk sit around a partially completed drawing of the Old Capitol Building during the third annual Rock the Chalk community art festival in downtown Iowa City on Friday, Aug. 10, 2018.
Sticks of chalk sit around a partially completed drawing of the Old Capitol Building during the third annual Rock the Chalk community art festival in downtown Iowa City on Friday, Aug. 10, 2018. (Stephen Mally/The Gazette)

State investments, which the Legislative Services Agency projected would cost millions, were a significant blow to the proposal, adding fuel to opponents’ warnings of the bill producing no taxpayer savings. But the more likely end of the proposal, according to Gazette news reporting, appears to be at the hand of House Republicans, who are refusing to take up the measure without additional information related to people impacted and taxpayer cost.

While Iowa has debated the possibility, the national landscape on the issue also has changed.

It was the Affordable Care Act, which expanded who could receive Medicaid and offered additional money to the states to offset the expansion, that set up the existing waiver system. As Iowa planned to do, states could ask the federal government for a waiver to bypass or expand federal provisions.

Although a handful of states under the Obama administration requested permission to implement work requirements, the administration largely refused. But the Trump administration has embraced the idea, which has led to about 15 states receiving permission to mandate work requirements for their Medicaid programs. About half those with permission have active programs in place.

But, this past week, a federal judge struck down such work requirements in Kentucky and Arkansas, saying the states didn’t consider the impact on people’s health care coverage. Because the purpose of Medicaid is to give medical care to low-income people, the judge rejected the initiatives as undermining that mission.

In Arkansas, for instance, 18,000 people were disenrolled from Medicaid after work requirements went into effect. Although work requirements had not yet been rolled out in Kentucky, that state estimated 95,000 people likely would lose health insurance.

The judge in the case, James Boasberg, highlighted the circumstance of one Arkansas man as representative of what Medicaid recipients faced under the new mandates. Under Arkansas requirements, the man would need to make a monthly, online report of his work status.

This was required although the man lacked access to and had difficulty working with computers.

Nonetheless, in June of last year, the man made an online report, but didn’t realize he needed to do so each month. So, when he later went to pick up his prescriptions, he was no longer covered and could not afford the $800 needed to obtain his medicine. His medical condition deteriorated, and he was subsequently fired from his job.

Federal approval of the work requirement, Boasberg wrote, was “arbitrary and capricious because it did not address … whether and how the project would implicate the ‘core’ objective of Medicaid: the provision of medical coverage to the needy.” The judge stopped short of saying all such requirements run afoul of Medicaid’s mission.

That’s important because it leaves the political door open for changes advocated by the Trump administration, changes that Republicans have wanted to implement on various levels since reforms in the 1990s under the Clinton administration gave states latitude to create work requirements in the Temporary Assistance for Needy Families cash-assistance program.

The question we should be asking, however, is why. What good are work requirements and why are they needed?

According to some, work requirements are a biblical mandate. “For even when we were with you, this we commanded you, that if any would not work, neither should he eat,” reads 2 Thessalonians 3:10.

The Congressional Research Service concludes work requirements are “to offset work disincentives in social assistance programs, promote a culture of work over dependency, and prioritize governmental resources,” as part of lifting people out of poverty.

But the government’s own research seems to show work requirements don’t accomplish these goals, and often wind up costing taxpayers more due to the bureaucracy they create.

For instance, following the 1990 reforms, a set of 11 controlled experiments in seven cities — the National Evaluation of Welfare-to-Work Strategies — was conducted by the U.S. Department of Health and Human Services.

Researchers found only small differences between groups of recipients required to work and those who were not. That is, most people accepting benefits worked, whether they were required to do so or not.

It was the level of their wages, not their will, that kept them eligible for assistance programs.

The national experiments showed reduction of benefits often outweighed increases in earnings from employment. On average, those “elevated” from assistance had $339 less in household resources.

Similar results were a part of more recent changes in Kansas, when it cut off food assistance to “able-bodied” people with no dependents. Kansas researchers found earnings of former food assistance participants increased, but few earned enough to offset the value of their previous benefits, thus leaving them in worse position than they once were.

Work requirements often do the same to government budgets. The most successful of the national experiments — which, let’s remember, wasn’t really all that successful in terms of showing significant differences between those required to and not required to work — included notable investment in staff members and programming. In contrast, federal researchers directly attributed poor results in some experiment locations to limited staff and program funding.

Therefore, it was smart for Iowa House Republicans to press the brake pedal and demand more information. Iowans need a better view of how work requirements will impact those on Medicaid, and the state budget. The last thing the state needs is another rushed piece of legislation tangled in a costly court battle.

This column by Lynda Waddington originally published in The Gazette on March 31, 2019. Photo credit: Stephen Mally/The Gazette