It’s official: Kentucky is the first state to fundamentally change its 50-year-old health insurance program.
Created alongside the elderly insurance program Medicare, Medicaid provides affordable health care to low-income people, and is the primary payer of long-term care for seniors and people with disabilities. The federal health department approved Kentucky’s plan to change the state’s Medicaid expansion program by adding unprecedented prerequisites for obtaining coverage.
The state’s upended Medicaid program, Kentucky HEALTH, asks beneficiaries to pay premiums and cost-sharing and imposes work requirements (failing to pay after 60 days or failing to report timely employment changes means coverage is suspended). A few groups are exempted — more on that later. Additionally, the Medicaid expansion group — with the exception of “medically frail” — will not reap the same benefits as the original Medicaid group (whose income difference is about $4,000): non-emergency medical transportation is not covered and beneficiaries will need to purchase separate vision and dental care. Additionally, retroactive eligibility ends for most beneficiaries — meaning coverage won’t kick in until first premium paid.
According to Kentucky administration officials, the changes are expected to save Kentucky $2.4 billion over the next five years. The trade-off? Thousands go without health insurance; state officials say 95,000 people will move off Medicaid and the Kentucky Center for Economic Policy (KCEP) projects nearly 96,700 people over the next five years. (KCEP’s projection is based on an August version of the plan, which is largely the same as the current plan.) State officials contend Medicaid beneficiaries will transition to private insurance, and presumably some ousted enrollees will look to the Obamacare marketplace, which Gov. Matt Bevin (R) has described as a “disaster.”
Currently, roughly 1.4 million people are covered through the state’s Medicaid program.
Officials from the Centers for Medicare and Medicaid Services (CMS), a division within the federal health department, encouraged state Medicaid directors nationwide on Thursday to look to Kentucky and nine other states who’ve sought similar changes for ideas to bring to their own states. Louisiana said it was looking into work requirements as CMS rolled out its new guidance; Gov. John Bel Edwards (D) hired the same consulting firm Kentucky used for its proposal.
Republicans are reportedly trying to cut social safety net programs, so emboldening changes to Medicaid isn’t too surprising. And it speaks to the country’s partisan understanding of what Medicaid is: insurance or welfare?
One reason partisans may react differently to imposing work requirements in Medicaid: Most Democrats view Medicaid as health insurance, while most Republicans see it as welfare https://t.co/GPPDRtxkHD pic.twitter.com/uQVxDd7gmm
— Craig Palosky (@CraigPalosky) January 11, 2018
As policy officials experiment with how much Medicaid can withstand, the health and financial security of the country’s most vulnerable is at play.
People will lose health coverage
CMS Director Seema Verma told reporters on Thursday that “we see moving people off Medicaid as a good outcome because that means they do not need the program anymore and have transitioned to a job or can afford insurance.”
Evidence from Kentucky’s TANF cash assistance, a welfare program with which state officials are trying to align Medicaid, disputes Verma’s point.
A bit of background on the country’s safety-net programs: The 1996 Personal Responsibility and Work Opportunity Act required beneficiaries to work and limited how long people could receive federal assistance. Similar to how the Trump administration is billing the Medicaid overhaul, the Clinton administration said changes to welfare would encourage “needy” people to find work, move out of poverty, and up the economic ladder.
It didn’t pan out that way.
In 1997, 66,664 households received cash assistance; as of September 2017, 6,669 adults and 31,480 children do. While TANF enrollment in Kentucky dropped significantly since federal welfare reform, people didn’t escape poverty, according to a study conducted by Marketplace and the Center for Budget and Policy Priorities:
If someone’s financial situation is unchangeable, it’s hard to envision them dropping Medicaid coverage and moving onto private insurance. Contrary to Verma’s affirmation, people could move off Medicaid and go uninsured.
The question is who?
A variety of activities fulfill Kentucky’s work requirements: job skills training, education-related employment, general education, and community service. Beneficiaries will need to perform 80 hours of “community engagement” a month. What could trip beneficiaries up is the paperwork. Beneficiaries need to report to state officials that they are working and update them with changes. Failing to do so temporary locks out enrollees from coverage for six months.
“Folks who are working, work inconsistent hours — have inconsistent incomes,” Kentucky Center for Economic Policy’s Dustin Pugel told ThinkProgress. They’re people who work in department stores, construction, and restaurants.
The majority of people with Medicaid insurance nationwide work; those who don’t work are students, caregivers, ill, or have a disability. For the few who aren’t working, state officials cannot use federal money to build job training programs.
Kentucky officials say they are not going to require the children, pregnant women, ill, including those who struggle with addiction, or disabled to work. (These groups are also exempted from other Medicaid changes.) Even so, advocates are concerned because of the ambiguity of the “medical frailty” determination. “Not sure who would be the one to say so,” said Pugel. “Not sure if it’s a doctor or [managed care organization] or state.”
State officials say the Medicaid system will look at health registries to identify if someone is “medically frail.” Managed care organizations can screen for patients and doctors can report. But leaving this designation to health care providers is ethically complicated:
The guidance says states should "exempt . . . any individuals with acute medical conditions validated by a medical professional that would prevent them from complying with the [work] requirements " making the doctor decide if their patient gains or loses Medicaid.
— Bob Doherty (@BobDohertyACP) January 11, 2018
The “bureaucratic complexity” and “casework discretion” of the nation’s safety net programs are part of why scholars like Frances Fox Piven say the way welfare has been run is racist. “A state- and county-run welfare system, and the skewed discretion it allowed line workers, produced a deeply racist system of welfare,” she writes. A recent study suggests she’s right.
Welfare coverage varies by race
Drops in coverage nationwide could vary by race. CMS told state Medicaid directors that they could make “changes to [work] requirements or allowable activities due to economic or environmental factors.”
Health policy expert Sara Rosenbaum explained to Vox’s Dylan Scott the potential of racial redlining with Verma’s suggestion. “CMS would allow states to account for local conditions, such as high unemployment in certain areas or other factors, to provide exemptions from a work requirement,” she told him. “Rural areas, more likely to be white, could have fewer job opportunities, less robust transportation, and fewer social support services, all things that might lead a state to provide an exemption from the work requirement. The result, intentional or not, is that black people on Medicaid … could face a higher burden under these waivers.”
In Kentucky, seeking such exception could produce problematic results. Eastern Kentucky, the Appalachian mountain region, has higher rates of unemployment than any other part of the state — and almost everyone living there is White. The largest share of Black Kentuckians live further West in Jefferson, Christian, and Fulton counties. And these populous areas have higher rates of employment.
The potential for racial redlining hadn’t occurred to Pugel until he heard his boss mention it. He then recalled Kentucky’s SNAP food stamp program economic exceptions.
Kentucky officials sought work exceptions for the SNAP food stamp program; the state made annual requests since 2009 and eventually let them expire based on unemployment rates. The first couple counties to expire included areas where Black Kentuckians make up the largest share of the population. Now just a handful of counties have an exception — Bell, Clay, Harlan, Knox, Leslie, Letcher, Perry, or Whitley Counties; these areas are where White Kentuckians make up the largest share of the population.
Already, a few consumer advocacy groups told ThinkProgress they intend to file lawsuits against the Medicaid waiver. Seeing as the health department and White House are already communicating different objectives, the Trump administration is likely to have a tough time in court.
UPDATE: This post has been updated to include Kentucky officials’ estimate on how many will lose coverage and the current total number of beneficiaries. It’s also updated to clarify children and pregnant women are also exempted from Medicaid changes, Pugel’s thoughts on racial redlining, and that Kentucky expanded Medicaid in 2014.