The legislation was presented as a way to address the fiscal concerns around the program and “encourage personal responsibility.” However, one expert said many of the policies are shortsighted and even against federal Medicaid policy. (Lauren Chapman/IPB News)
A potential overhaul of the state’s Medicaid expansion program would include changes such as caps on enrollment and limits on lifetime eligibility. The overhaul would also reintroduce a proposal that the federal government previously blocked because it could lead to a loss of coverage.
Work requirements position employment as a condition of eligibility. It’s one of the many policy changes proposed in the Senate GOP’s plan for the Healthy Indiana Plan, or HIP, which was presented as part of the caucus’s legislative agenda.
Senate Bill 2 includes the overhaul of the HIP program, as well as several other Medicaid changes. It is scheduled for a hearing in the Senate Appropriations Committee on Thursday following the adjournment of the Senate session.
The legislation was presented as a way to address the fiscal concerns around the program and “encourage personal responsibility.” However, one expert said many of the policies are shortsighted and even against federal Medicaid policy.
The legal background on Medicaid work requirements
Leo Cuello, a research professor at Georgetown University’s Center for Children and Families, said the legal precedent against work requirements is really strong.
“Any state pursuing work requirements will have an uphill climb because they will have to convince courts to do something different than this federal court did multiple times in multiple instances,” Cuello said.
During the first Trump administration, 13 states were approved for work requirements. Those requirements were stalled in 12 states due to lawsuits. The Biden administration later rescinded those approvals because the policy goes against federal Medicaid law and causes people to lose coverage.
The lawsuits used a similar framework that — just last year — led to a federal ruling against Indiana’s use of premiums in the HIP program. They claimed work requirements weren’t allowed based on the Administrative Procedures Act.
“That means they are procedures specific to how the approvals were done in those states," Cuello said. "So they don't necessarily say that a work reporting requirement is just flat out illegal. What they say is that [the U.S. Department of Health and Human Services] approving it in all of these places was illegal.”
The rulings in these cases establish that work requirements — as a policy — go against the objectives of the Medicaid Act because they can lead to a loss of coverage. And work requirement language isn’t present in the federal policy.
Cuello said other programs like SNAP or TANF have work requirement language written into the statute.
“At the same time that Congress put that language in those other statutes, they very explicitly pulled Medicaid away from those other programs and did not put that language in Medicaid,” Cuello said. “Everything about the Medicaid statute indicates the intent to not have work requirements. There's nothing authorizing or allowing work requirements in Medicaid.”
The legal framework depends on the fact that these policies are exceptions to the federal Medicaid rules and go against the objectives of the Medicaid Act.
“It certainly leads to the inference that it would again be illegal because states would have to be showing that, somehow, these work reporting requirements were improving coverage,” Cuello said.
However, Cuello said because all of these cases were statutory, federal lawmakers could rewrite the statute to make the policies allowable. He also said that specific change to the statute is not the most immediate threat to the program on a federal level.
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But are work requirements effective?
Cuello said proponents of work requirements often highlight Georgia’s program because it is the only Medicaid expansion program that is currently approved for work requirements.
However, Cuello said it actually serves as a great case study for why they don’t work. Around the same time as Georgia’s approval, North Carolina was approved for expansion without work requirements.
While Georgia hasn’t enrolled 6,000 people yet, Cuello said North Carolina has surpassed 600,000 people – despite both states having similar sized populations.
“The difference between the two programs is that North Carolina implemented a clean expansion,” Cuello said. “Georgia implemented a work requirement model, the only work requirement model functioning right now.”
Cuello said the policy has “totally suppressed” enrollment in Georgia’s program.
“Even when a state has a chance to try and thoughtfully design a work requirement, this is what it leads to, literally 100 times worse,” Cuello said. “It's just an absolute disaster.”
Cuello said what these requirements do instead is create “red tape reporting requirements.” When people fail to meet the reporting requirements, their health insurance gets taken away, which can lead to a sicker workforce.
He said this idea is also trying to solve a problem that isn’t actually a problem.
“Most Medicaid enrollees are in working households,” Cuello said. “The data shows that. It also shows that the ones who aren't working usually have a good reason.”
Those reasons, Cuello said, can range from someone providing child care or being enrolled in an educational program.
The GOP plan does make a number of exceptions to the work requirements. These include pregnant people, those who volunteer for a certain number of hours, those receiving unemployment, those in substance use disorder treatment facilities and those deemed unfit to work.
When the legislation was announced, Sen. Ryan Mishler (R-Mishawaka) claimed that HIP covers “childless adults that are able-bodied.” However, the Medicaid expansion population does not specifically exclude parents. The legislation does make an exception to the work requirement for parents or caregivers of children — but only those under the age of 6 or those who are deemed medically dependent.
Cuello said even with exceptions, the work requirements don’t address the root causes of why people don’t work.
“We have the data telling us why people don't work,” Cuello said. “They don't work because they don't have child care— access to affordable child care. They don't have transportation. They don't have the job training they need for the jobs that are available or there are no jobs available matching their skill set. Those are the reasons people don't work.”
In some cases, Cuello said the policy can actually prevent people from working.
“If you have a chronic health condition and you take some kind of medication that you need in order to be healthy, when they take your health insurance away, you stop being able to work,” Cuello said. “That's why the data shows that these work reporting requirements don't actually lead to anybody working, but they do lead to a lot of people losing their health insurance.”
Enrollment caps and eligibility limits
SB 2 also includes a series of other changes aimed at minimizing the costs of the program to the state, such as putting a cap on the number of people in the program and limiting how long people can be in the program.
There are currently more than 680,000 Hoosiers on HIP. Senate Republicans want to cap that program at 500,000 people, with everyone else moved to a waitlist. Additionally, there would be a lifetime limit of 36 months on the program.
Cuello said these policies are a bad game for states to play voluntarily.
“It defeats the whole purpose of the program, which is to be there for people who need it when they need it,” Cuello said.
Cuello said these types of policies have a “shortsighted view” of the relationship between states and the federal government when it comes to providing health care.
“If tomorrow, Indiana's economy goes into recession and tons of people in Indiana lose work and lose their work-based health insurance and need health insurance, Indiana has to spend a lot of money on health and health care programs,” Cuello said. “Medicaid guarantees that the state gets federal matching funds and it gets them on an open ended basis. As state spending goes up, the state continues to draw down federal matching funds.”
Senator Mishler said people who might be removed from the program would have access to the federal Health Insurance Marketplace. He said there “shouldn’t be anybody who would totally lose coverage altogether.”
Cuello said this isn’t an accurate representation of how the federal marketplace works.
The Medicaid expansion program covers adults without disabilities whose income is up to 138 percent of the federal poverty line. The subsidies offered in the marketplace aren’t offered to people below the federal poverty line.
“If the state of Indiana were to drop its Medicaid expansion, or any limits it creates to its current Medicaid expansion, for people below 100 percent of federal poverty, that marketplace solution is simply not there,” he said.
Cuello said even for people above the federal poverty line, the marketplace isn’t always a solution.
“There are many, many people who will lose their Medicaid coverage and do not go into the marketplace,” Cuello said. “In fact, it's a majority.”
Federal threats to Medicaid
Cuello said researchers and advocates are focusing a lot of energy on bigger potential threats to the Medicaid program at the federal level that could do even more harm. He said these include a cap on federal Medicaid funding for states, changing the reimbursement formula for states and eliminating a class of taxes that states use to fund Medicaid programs.
“Those changes, in any combination thereof, result in massive financial decreases in funding for Indiana Medicaid,” Cuello said.
Cuello said a majority of federal funding to states comes from Medicaid, which would put states into a “terrible position.”
“There's no way the state could raise taxes enough to make up for that kind of a loss. And so what the state will inevitably be forced to do is cut health care,” Cuello said.
Cuello said it’s important for people to also pay attention to how federal legislation may impact Medicaid programs.
“Your neighborhood is going to be hurt by these cuts that people up on high in Washington, D.C., are talking about,” Cuello said.
Cuello said those decisions may affect nursing care, obstetrics, mental health services and almost every other part of health care.
Abigail is our health reporter. Contact them at aruhman@wboi.org.
