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Kentucky tests how much to demand of Medicaid recipients

In July, Kentucky will become the first state to enforce work and community engagement requirements for some Medicaid recipients. The debate centers on fundamental questions: Does work make you healthier, or do you need to be healthy to work? And is health care a benefit or a right?

Alex Slitz/Lexington Herald-Leader/AP
Kentucky Gov. Matt Bevin announces federal approval of the state's Medicaid waiver in the Capitol Rotunda in Frankfort, Ky., Jan. 12. Kentucky became the first state to require many of its Medicaid recipients to work to receive coverage, part of an unprecedented change to the nation's largest health insurance program.

Late last month, while recovering in hospital, Kayleeann Hummell had an unusual epiphany after emergency surgery: She was grateful her health problems had happened now.

When the high school senior was sent home by the school nurse in intense pain, she headed to a hospital. Within 10 minutes she was being prepped for appendix surgery.

Growing up in a poor family in northern Kentucky she has been on Medicaid almost her entire life. On that day, she says, it literally saved her life. But if her health issues had struck this July, she says, “I probably would have died.”

July is when Kentucky will take the American health-care system into uncharted territory, becoming the first state in the country to enforce work and community engagement requirements for a portion of its Medicaid recipients.

For Ms. Hummell and others on Medicaid around the state, the looming changes are a source of fear and anxiety. For many Kentuckians who aren’t on Medicaid, the changes are an overdue effort to turn poor people into productive citizens. For the Republican administrations – in both Kentucky and other states including Indiana and Idaho – pursuing these changes at the state level, they are an opportunity to replace the Obama-era vision for health care with their own, a vision they say is built on innovation and empowering the poor.

Opponents counter that the new program will cause tens of thousands of low-income people to lose their health insurance, not only because of the new requirements but because of the burden it places on people to navigate an often bureaucratic and confusing system. And the debate around it has settled around some fundamental questions at the heart of the country’s health-care debate: Does work make you healthier, or do you need to be healthy to work? Has the Affordable Care Act approach been working, or does it need revamping? And is health care a benefit or a right?

Kentucky 'at the bottom of every list' for health

When Gov. Matt Bevin entered office in 2016, says Adam Meier, his deputy chief of staff for policy, “what we were seeing was Kentucky is the bottom of every list we want to be at the top of when it comes to health outcomes.”

“What we wanted to do was really redesign the [Medicaid] program,” he adds. “Educational attainment and income, all those things that the data shows have a correlation to health outcomes, we wanted to help address all of those in one program.”

The result is Kentucky HEALTH, an ambitious program that aims to “help [members] be responsible for their health” and “move towards self-reliability, accountability, and ultimately independence from public assistance,” while improving their health and educating them about the private health insurance market.

The program makes several significant changes to Kentucky’s Medicaid system – which expanded under the Affordable Care Act in 2014 to include low-income adults – including ending coverage for non-emergency medical transportation and providing incentives for avoiding “inappropriate” emergency room visits. The program would also cover dental and vision care only if the member earns enough “savings and earned incentive dollars” in a personal account.

The work requirements, unprecedented in Medicaid's 53-year history, are attracting the most attention, however. To remain eligible, able-bodied working-age adults without dependents will have to work at least 20 hours a week, be a full-time student, or complete a number of other “community engagement” activities ranging from job searches and vocational training to community and caregiving service. Not meeting one of those criteria would lock people out of coverage for six months, though they could regain it early through on-ramps such as taking a health literacy course or paying a premium.

While the program is projected to save Kentucky taxpayers more than $2 billion over five years, the Bevin administration says, its own projections indicate it will also reduce the number of Medicaid enrollees by 95,000 – including almost 20,000 people who qualified for Medicaid before the 2014 expansion.  According to the administration, that reduction will mostly be from people increasing their income and moving to private insurance. According to critics, that reduction will mostly be from people losing insurance entirely, including some in the traditional Medicaid population who wouldn’t be required to work. Health advocacy groups have also sued the state, saying the program violates the Social Security Act.

“We think work is a very positive thing and we know the value to the individual and the community,” says Emily Beauregard, executive director of Kentucky Voices for Health. “The problem is this requirement is so administratively burdensome, there’s so much red tape, that people will surely fall through the cracks even when they’re doing everything right.”

Critics point to Oklahoma. In 2014, the state implemented a three-month time limit for SNAP benefits, previously known as food stamps, for able-bodied adults unless they were in work or training programs for 20 hours a week. Roughly 40,000 people in the state lost their benefits, according to the nonpartisan Center for Budget and Policy Priorities (CBPP). The state did not offer workfare or job training for everyone at risk of losing the benefit.

“There’s nothing in [the program] that’s going to create jobs in rural Kentucky,” says Joan Alker, executive director of the Center for Children and Families at the Georgetown University Health Policy Institute.

Critics also note that the majority of Medicaid expansion enrollees in Kentucky already work. Four out of five have worked at some point in the past five years, according to the Kentucky Center for Economic Policy (KCEP). The problem is, they’re likely working low-wage jobs with irregular hours. As of 2015, the three industries employing the most Medicaid expansion-eligible adults in Kentucky were restaurants, construction, and department stores, the KCEP says. Requiring people to work won’t mean there will be jobs for them, they argue.

Supporters, meanwhile, point to the success stories. The cities of Riverside, Calif., and Portland, Ore., both had successful “welfare-to-work” programs in the late 1980s and mid-1990s respectively. Both also provided intensive work training programs for recipients, the CBPP found.

What seems to be a fundamental disagreement in the debate is the correlation between health and work. Does working help you become healthier? Or does becoming healthier help you work?

Governor Bevin believes it to be the former, and the Trump administration has bolstered this argument. In a guidance for states on how they could change their Medicaid systems, the Center for Medicare and Medicaid Services (CMS) says that “a growing body of evidence suggests that targeting certain health determinants, including productive work and community engagement, may improve health outcomes.”

Most of the research the guidance cites, however, concerns how employment improves mental health outcomes. When it comes to other kinds of health outcomes, Professor Alker believes, “they have the causality backwards.”

“People who are healthier can work,” she adds, “and taking Medicaid away will mean they won’t.”

Kentucky as testing ground

Kentucky has served as something of a test bed for modern US health-care policy since 2014. The state has had one of the most successful Medicaid expansions in the country, according to Kaiser Family Foundation. But Bevin – who has said that growing up in a poor, self-reliant family in New Hampshire taught him that stimulus programs are “enslaving the American people” – wants to take the state in a new direction.

Other states are following suit. Indiana will be implementing its own work requirements later this year, and eight other states have similar applications pending with the Trump administration.

Ohio is one of them, and Rea Hederman, vice president of policy at the Columbus-based Buckeye Institute, is excited to see states moving this way.

“I look at it as a way to affirm American values,” he says. “It’s not [just] a way to balance the budget, it’s a cultural shift, reinforcing the importance of work and connecting with the community.”

That said, in Kentucky budgetary pressure from the Medicaid expansion has been growing. While the federal government pays a larger share of Kentucky’s Medicaid costs than it does in most other states, by 2021 state taxpayers are projected to spend $363 million on Medicaid, an increase from $74 million in 2017.

“The cupboard is bare,” says state Sen. Steve West, a Republican. “Medicaid costs [are] a larger and larger percentage of our budget, pushing out education needs and post-secondary needs and all these other needs.”

“Work is not a bad thing. It is a way out,” he adds. “Once they see they can do it, [they’ll see] government dependency is not a good option for them because they could make a lot more money and have a much more rewarding life.”

Across the aisle, state Rep. Jim Wayne blasts that view as “a white, wealthy perspective on how poor people should be fixed.”

“We’re the success story” for Obamacare, he adds. “What you’re seeing now is an attempt by the right-wing extremists ... to reverse that.”

Whether people were getting healthier under the Medicaid expansion is another point of debate.

Rates of smoking, cancer deaths, and “preventable hospitalizations” had remained among the highest in the country since the expansion began, the state noted in its proposal for the program. During the first year of the expansion, it said fewer than 10 percent of recipients had an annual wellness or physical exam.

But two months later, researchers at Harvard University released a study showing that low-income adults in Kentucky and Arkansas – two expansion states – reported higher quality care and improved health, received more primary and preventive care, and made fewer ER visits than low-income adults in Texas, a state that didn’t expand Medicaid.

One point that all sides seem to agree on is that detecting significant improvements in the health of Kentuckians will take years.

A year into Kentucky HEALTH’s implementation, Meier says he would like to see “an uptick in preventive care” – which has already increased for some screenings, but not others – and “more knowledge and understanding” of the health-care system.

“If we see those small changes … then I think that will show that we’re making progress,” he adds, “but again, it’s going to be long-term.”

'More questions than answers'

Medicaid covers Donald Fosdick's treatment for anxiety, something he puts down to the mounting stress of not being able to find a high-paying job in Lexington. He also was diagnosed with cataracts and is not allowed to drive at night. Even when he drives during the day, he says he has to drive past street signs before he can read them.

He imagines that complying with the new program will be difficult, but he is more confused than anything. “Every time I read something I’ve just got more questions than answers,” he says.

“It seems to me they’re just trying to make it harder, so they lose people so they don’t have to spend money,” he adds. “I don’t understand how all these people are just going to run out and get jobs. It’s not like they’re just handing out jobs, or volunteer work for that matter.”

About 120 miles away, in the poor, rural town of Hazard, the Deatons are eating lunch at a Pizza Hut. Stacey Deaton used to work as a teacher’s aide in the county school system, and mentions that she saw children in her classes say they wanted to grow up to draw welfare like their parents.

“I think a lot of it is learned behavior,” she says. “I just feel like a lot of people take advantage of the system.”

“Disabled people, veterans – I think those people deserve it and they shouldn’t have to work for it,” she adds. “But the people who can and are able to, I 100 percent think that they should.”

For his part, Mr. Fosdick is hoping he can find a part-time job – though it would have to be one that doesn’t require driving at night.

Hummell, the student who had emergency surgery, has worked part-time jobs throughout high school and will be looking for full-time work as soon as she graduates.

“If it’s going to happen, I have to work with it, and there’s really no way around that,” she says.

She still worries about the work requirement, though.

And other issues, even ones that can seem small to middle- and upper-income people, can become barriers for low-income individuals. When Hummel had surgery she had run out of minutes on her phone – a fairly common occurrence near the end of a month for her, she says – and so would not have had the cellular data to notify the state about her issue.

It’s these details that are getting lost in the debate, says Cara Stewart, a health law fellow with the Kentucky Equal Justice Center.

“Have you ever missed a deadline? Have you ever filed something late? Have you ever had time when you couldn’t get internet on your phone?” she says.

“Everybody thinks work is good,” she adds, but “it requires a few follow-up questions.”

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