The safety net in Republican states is about to get skimpierOn January 20, 2018 by Zander
KENTUCKY, a poor, rural state nostalgic for coal, has never been quite sure of its politics. For three years it was the darling of Obamacare. Governor Steve Beshear, a rare Appalachian Democrat, complied with the reform by creating a statewide health-insurance exchange and expanding Medicaid (government-subsidised coverage for the poor and disabled). Between 2013 and 2015, uninsured rates for poor adults fell from 40% to 9%—the biggest improvement in the country. But now that the state is under new management—the Republican governor, Matt Bevin (pictured above), is a Tea Party favourite—Kentucky may soon be notable in health-policy circles for a new reason: it wants to become the first state in history to require some Medicaid recipients to work.
Other states with Republican governors, including Indiana and Arkansas, hope to follow. Before long, the health-care safety nets in these states may look very different from those in Democratic ones—and indeed from those in other rich countries, where the poorest citizens receive health care with no strings attached.
The Trump administration approved Kentucky’s sweeping plan—which Mr Bevin called “the most transformational entitlement reform…in a quarter of a century”—on January 12th. The state will receive an exemption from federal rules governing how Medicaid works. Such waivers are supposed to allow states to test experimental programmes “while preserving or enhancing the quality of care furnished”. Yet Kentucky expects its plan to reduce the number of Medicaid recipients by 15%, suggesting that the administration is bending the rules a little.
The third freedom
When the reform comes into force in July, able-bodied adults enrolled in Medicaid risk losing their insurance if they do not fulfil a “community engagement” requirement—20 hours of work, job-seeking or volunteering each week. A thicket of regulations will determine precisely who must comply; those in school or taking care of a family member will be exempt. The state expects the new mandate to affect 350,000 Kentuckians, half of whom already have jobs, and estimates that it will shed 95,000 from its Medicaid programme. The impact could be higher because prospective enrollees will be deterred by the sheer complexity of the new rules, argues Sara Rosenbaum of George Washington University. Already, people need a lot of nudging to enroll. Of the 285,000 non-elderly Kentuckians who are still uninsured, 43% are actually eligible for Medicaid but have not signed up.
Adding work requirements to America’s safety net is not a new idea. The previous overhaul of America’s cash-benefits programme, in 1996 under President Bill Clinton, instituted a work requirement, along with a time limit, on Temporary Assistance for Needy Families (TANF), the rebranded government scheme. The theory was that TANF would serve the truly needy, while the lazy would progress into lives of self-sufficiency. For about a decade this looked like a great success. The number of claimants plunged by 50% in four years. Over the longer term, the results looked less good. Short-term increases in employment did not seem to translate into marked improvements in income.
Requiring work, volunteering or study in exchange for Medicaid has never been attempted before, though. And there is some evidence that, rather than discouraging work as many Republicans claim, Medicaid incentivises toil. After Ohio expanded its Medicaid programme, three out of every four unemployed enrollees said that getting coverage had made it easier to seek work. International comparisons do not support Republicans’ argument, either. Many countries with universal access to health care have a higher proportion of working-age people in employment than America does. (A likelier problem is that taking away benefits as people earn more disincentivises job advancement.)
Republicans have sought to shrink welfare programmes for decades, often saying that they are unaffordable. But their reasons for reforming Medicaid seem to be more about morality than money. Mr Bevin says that the savings made do not matter. His office adds that the rationale behind the plan was—confusingly—to promote “better health outcomes”. A spokesman for Rand Paul, Kentucky’s libertarian Republican senator, says that “work should not be seen as a punishment, but as an opportunity”. Paul Ryan, the House Speaker, has warned of the dangers of turning the safety-net into “a hammock that lulls able-bodied people to lives of dependency and complacency”.
Yet it is not true that most, or even many Medicaid claimants are shirkers. Just 36% are non-disabled adults, and 60% of that group already work. Those who are not working and not disabled do not seem to be lying about in hammocks: 36% say they are ill, 30% take care of a family member, 15% are in college, and so on. At most 10%, or 1.4% of all enrollees, could be said to lack any good reason for not working. “I don’t need added pressure to get a job, the pressure to survive is already enough,” says Tajah McQueen, a caterer in Louisville who lost her job on December 28th and applied for Medicaid soon afterwards. She already pays $400 a month for her student loans, $2,000 for her mortgage and takes care of a two-year-old daughter.
To weed out malingerers, Kentucky is proposing to build an unwieldy administrative apparatus. This bureaucratic leviathan will enforce regulations seemingly designed to catch out the maximum number of recipients. The state will begin by collecting premiums, capped at $15 per month. This would seem minimal, except that to qualify for Medicaid as a single person requires an annual income of less than $16,640. For Kentuckians who gained coverage under the Medicaid expansion, non-payment of these premiums for two months results in a six-month lockout on coverage—only to be restored after payment and attendance of a “health-literacy” class. When Indiana set up a similar programme, 55% of people had missed payments within the first 21 months, leaving them with inferior coverage or none at all. Participants must also document their work on “at least” a monthly basis. Because most working Medicaid recipients are in low-paying industries with erratic scheduling, such as retailing, agriculture or construction, they may not fulfil the 20-hour requirement in a week. Someone who temporarily makes too much money—more than $320 a week as a single person—may risk getting the boot.
Of the ten rural counties in the country with the highest share of adults enrolled in Medicaid, six are in Kentucky. These areas are also the Trumpiest. There is a remarkably strong correlation in Kentucky between Medicaid enrolment and support for Republicans (see chart). During the 1990s, racial animus, especially the notion that lazy blacks were crowding the welfare rolls, was shown to be especially powerful in shaping attitudes to the safety net. Yet the people most likely to suffer from these new efforts at reform are the poor whites who helped send President Donald Trump to the White House.