New Medicaid Waiver Policies Can Lead to Loss of Needed Coverage

Section 1115 of the Social Security Act allows the Secretary of Health and Human Services to waive certain Medicaid requirements and approve state proposals for experimental projects in programs. The waivers, intended to promote innovation, are not new. Historically, states have used them to cover new populations or implement delivery system reforms like providing services to people through managed care. But recently waivers have attracted attention—including from the mainstream media— as states have started using them in radically different ways. A prominent example involves states using waivers to obtain federal permission to condition receipt of Medicaid on work and work-alternative requirements. The issue is the subject of ongoing litigation.

To be sure, the stakes are high. Such waivers are likely to cause thousands to lose Medicaid coverage, and along with it, access to critical health care and long-term services and supports (LTSS). A new report from the AARP Public Policy Institute provides an in-depth analysis of how these new policies are likely to impact Medicaid enrollees. Below are some highlights from the report.

Consequential Coverage Losses

In addition to work—and work alternative—requirements, examples of other new waiver policies states are imposing on current and new Medicaid beneficiaries include higher premiums and lock-outs—that is, loss of coverage for a specified length of time. Such policies mean that many people who need access to health care and LTSS could go without the care they desperately need if they are unable to meet such requirements.

Under these new waiver policies, loss of Medicaid coverage can stem from reasons that go beyond the policy itself. Causes of coverage loss can include lack of knowledge about new requirements, barriers to people’s ability to comply with reporting requirements, and literacy and comprehension challenges that make it difficult to understand what is required. In Indiana, for example, one-third of the people disenrolled from Medicaid for non-payment of premiums were unaware their payment issues could put their coverage in jeopardy.

Even if a state implements the best outreach and education strategy, hard-to-reach populations—like homeless individuals, people with cognitive impairments, and those with low literacy levels—will likely fall through the cracks and lose coverage. Unfortunately, such people comprise a large number of those enrolled in Medicaid.

In Arkansas, among Medicaid enrollees who were unemployed and potentially subject to a work requirement, 23 percent did not have a high school diploma and 18 percent reported cognitive limitations such as difficulty concentrating, remembering, or making decisions.

Administrative barriers can also lead to coverage losses. In Arkansas, where more than 18,000 people lost Medicaid coverage since the implementation of a work requirement, much of the coverage loss may be attributable to the fact that until recently, enrollees could report work hours through only one means that for many people is inaccessible: online. [1]

Beneficiary Impacts Must Inform State Policy Choices

As our report highlights, policymakers should consider how waiver policies—like work requirements and premiums—affect beneficiaries and their families before they are approved. They can start by examining the literature on the impact of similar policies imposed in Medicaid and/or other programs. Studies have consistently shown that even modest premiums significantly reduce participation in health coverage programs among low-income individuals. Similarly, research concerning the supplemental nutrition assistance program (SNAP) shows that work requirements result in significant drops in participation in this critical food program, which supports millions of low-income individuals.

Policymakers must clearly understand and share with the public, how new waiver policies are likely to affect Medicaid enrollment and administrative expenditures in their state before approval and implementation. Knowing the facts before moving forward gives all concerned parties the opportunity to decide whether the impacts on access to needed health care coverage among low-income Medicaid beneficiaries are consistent with the goals of the Medicaid program.

[1] Recently, a federal court blocked the continued implementation of the work requirement in Arkansas. The case is being appealed.

Lynda Flowers is a senior strategic policy advisor at the AARP Public Policy Institute. Her areas of expertise include Medicaid, social determinants of health (including social isolation), oral health, and health prevention/promotion.

Jean Accius is senior vice president for AARP Thought Leadership and International Affairs. His areas of expertise include aging, caregiving and long-term care policy.