The Alarming Effects of Dropping Adults from Medicaid

At the beginning of September, over 4,300 adults were dropped from the Arkansas Medicaid program for failing to meet the program’s work requirement. Implemented earlier this year under a Medicaid waiver, Arkansas imposed a “community engagement” requirement on beneficiaries that they spend 80 hours a month on work or other approved activities, unless they qualify for an exemption. Arkansas is not alone. To date, 12 states have applied for or received waivers to impose similar work requirements, though specifics differ across states. Those who fail to comply or report their compliance are moved off the program and barred from re-enrolling for a period of time.

While the reforms may be well-intentioned, they are also cause for some concern.  Recent research I conducted indicates that rule changes around eligibility requirements for Medicaid coverage can lead to more people lacking health insurance rather than increasing employment rates.

The stated goals of the community engagement requirement are, according to CMS Administrator Seema Verma, “to connect beneficiaries to work and educational opportunities.”  This is a positive goal, especially given the large body of social science research showing that means-tested government programs, including Medicaid, can provide a modest disincentive to work.  However, critics of the community engagement requirement, especially as implemented in Arkansas, say that those dropped from the program may not have received information about the requirement, may not have understood the requirement, and may have lacked the ability to report their hours via the state’s online system and thus are unlikely to benefit from community engagement.

Alarmingly, research studies tend to show that being dropped from Medicaid is harmful, worsening access to care and self-reported health.  In a recent study, I examined the effects of a change in program eligibility rules in the Tennessee Medicaid program that occurred in 2005 and that led to 170,000 adults being dropped from the program.  Using survey data from the U.S. Census Bureau that followed individuals over time from the beginning of 2004 through the end of 2006, I found that in 2005 Medicaid coverage rates fell sharply, from 18 percent to 13 percent, among adults in Tennessee while uninsured rates increased by a similar amount.  The survey data also show that hospitalization rates, doctor visits, and dentist visits declined, while use of free or public clinics increased.

Also worrisome is that the number of adults self-reporting their health to be fair or poor increased.  Disenrollment from Medicaid, by itself, was not sufficient to increase employment rates, suggesting that while Medicaid might provide disincentives to work, they are not easily undone.

My study suggests, first, that the inevitable disenrollment from Medicaid that will occur from the imposition of work requirements will lead to more people being without health insurance. Obtaining subsidized insurance through the state or federal exchanges established under the Affordable Care Act, something that did not exist in 2004, is also not an option as individuals disenrolled from Medicaid under these new rules are prohibited from doing so.

Second, Medicaid disenrollment will cause many to lose access to health care, creating a serious risk that individuals will not receive needed medical treatments.

Finally, if work requirements are going to successfully engage people with employment opportunities, they need to come with substantial training and work support and to be combined with a flexible set of exemptions for people who may have difficulty working, but may not qualify as disabled.

The experience with Tennessee’s disenrollment should serve as a caution against policies, such as community engagement requirements, that may rapidly reduce Medicaid coverage.

Thomas DeLeire is a professor in the McCourt School of Public Policy at Georgetown University.