In a nutshell:

  • Michigan is proposing to add a work requirement to the eligibility criteria for the Healthy Michigan Plan, Michigan’s 2014 expansion of Medicaid.
  • Following criticisms of the original proposal from groups like the Citizens Research Council, a more measured approach to a work requirement has emerged.
  • Health insurance is a fundamentally different kind of benefit than cash assistance, and promoting better health is one of the best way to create a productive workforce.

Following the lead of other states, Michigan has advanced legislation to add a work requirement to the eligibility criteria for Michigan’s Medicaid program. Some argue that adding a work requirement to Medicaid will promote self-sufficiency by addressing problems of welfare dependence, an apparent labor shortage, and the purported over-enrollment of the Medicaid program. Others contend that a work requirement will do little more than harm the vulnerable, and that a requirement is unnecessary because the majority of non-disabled, non-elderly adults on Medicaid already work.

Early on, the Citizens Research Council and other policy experts cautioned that these new requirements would be expensive to implement and difficult to calibrate in a way that avoided unintended harm. We expressed concern that any work requirement policy must ensure the centrality of health and have adequate safeguards to protect individuals facing various circumstances (from poor health to school attendance) that might preclude consistent employment. Following these criticisms, the Governor and legislative leaders have worked together to improve the original work requirement proposal substantially.

The newly passed proposal applies only to Healthy Michigan Plan enrollees who are between 19-62 years of age. It includes numerous provisions to account for the barriers to work faced by the Medicaid population, and allows the requirement to be met through self-employment, job training, internships, or education. This proposal also includes exemptions that protect individuals who may not reasonably be expected to work, such as individuals who are pregnant, disabled, medically frail, or have caregiving responsibilities.

The Governor should be commended for working with the legislature to make significant improvements to the original bill. As Michigan moves ahead to implement this Medicaid policy change, however, it’s worth continuing to consider where the idea originated and what its long-term consequences might be.

A policy shift from the Clinton era

At their outset, eligibility for federal public assistance programs and for health insurance through Medicaid were based solely upon income level and personal characteristics (e.g., age and disability). Eligibility diverged with the passage of The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, colloquially known as welfare reform. While Medicaid remained unchanged, other cash-assistance programs were rolled into the new Temporary Assistance for Needy Families (TANF) block grant.  This was the advent of a public assistance system that required work in exchange for time-limited benefits.

After more than 20 years, the relative success of work requirements in welfare programs remains characterized by varied evidence (that comes mostly from before the Great Recession). Some tout that the 1996 reforms were successful in reducing childhood poverty and increasing employment among low-income mothers. Proponents of work requirements generally also attest to the decline in welfare caseloads as evidence of success.

Reduction in the number of people receiving public benefits, however, is not necessarily a valid proxy measure for the number of people achieving self-sufficiency. While welfare reform reduced caseloads and increased employment, it also made TANF less responsive to increased need during economic recession. This has led to worsening conditions for low-income children and coincided with a substantial increase in extreme poverty.

Promoting both work and health

Medicaid was never included in the past paradigm shift toward emphasizing work for temporary assistance. While the traditional purpose of Medicaid has been to provide medical assistance to low-income, medically indigent individuals, the evolving role of the program has been to actively improve health (rather than just passively paying for it). In this regard, the Citizens Research Council found that Medicaid has been highly successful in Michigan.

The absence of Medicaid from past reform efforts reflected the fact that health insurance is a very different kind of benefit from cash assistance. It’s not difficult to imagine how independence from cash assistance may be reasonably attained through work (holding aside the various challenges and barriers presented by poverty). Independence from medical coverage is a bigger stretch, particularly as fewer employers offer health insurance and as the federal subsidies and individual insurance plans created by the Affordable Care Act remain imperiled. In fact, health expense can be a major barrier to financial independence, particularly if they are allowed to crowd out other household needs and expenses.

Laws and standards regarding emergency medical care also illustrate the difference between health insurance and welfare benefits. While an individual lacking public food assistance or other means to buy food cannot simply go to a grocer and expect to walk away with a bag of produce, an uninsured individual can show up at a hospital and be treated in a medical emergency, passing along costs to the health system in the process. Expanding Medicaid access dramatically reduced uncompensated care (and improved enrollees’ health); shrinking Medicaid will do the opposite.

The federal guidance that opened the door for a work requirement in Medicaid suggests that health may be improved through work by fostering community engagement, a sense of purpose, and higher earnings. Promoting employment for Medicaid enrollees, therefore, should be seen as another strategy to address poor health (not a means to reduce enrollment). By adapting the Healthy Michigan Plan to promote employment, education, and/or volunteerism  (similar to the way the program has already been used to promote healthy behaviors), the newly amended plan for a Medicaid Work Requirement might be seen as a step in the right direction. Nonetheless, restricting access to Medicaid might also still worsen health for some by pushing out-of-work individuals towards discontinuous, emergency care (and away from preventative services and primary care).

Any impact – positive or negative – from this policy change will, of course, be attenuated by the fact that most Healthy Michigan Plan enrollees are already working, in school, or eligible for one of the new proposal’s other exemption criteria. The Citizens Research Council suggested that the original work requirement proposal was more symbolic than substantive. By addressing many of our initial concerns, the revised policy is a far less objectionable symbol than its political progenitor.

Medicaid is, at its core, a health program and policymakers would be wise to build on approaches that leverage Medicaid as a mechanism to reduce the health-related barriers to employment and productivity that (especially) poorer individuals face. If new efforts are needed to boost labor-force participation, there are strategies to do so without sacrificing the public’s health. A healthy population and a productive workforce are each important needs for society—they need not be mutually exclusive.

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