Work requirements and health savings accounts in Medicaid

By Benjamin D. Sommers, Carrie E. Fry, Robert J. Blendon, and Arnold M. Epstein
Health Affairs, June 20, 2018 (online ahead of print)

Abstract

Alternative approaches in Medicaid are proliferating under the Trump administration. Using a novel telephone survey, we assessed views on health savings accounts, work requirements, and Medicaid expansion. Our sample consisted of 2,739 low-income nonelderly adults in three Midwestern states: Ohio, which expanded eligibility for traditional Medicaid; Indiana, which expanded Medicaid using health savings accounts called POWER accounts; and Kansas, which has not expanded Medicaid. We found that coverage rates in 2017 were significantly higher in the two expansion states than in Kansas. However, cost-related barriers were more common in Indiana than in Ohio. Among Medicaid beneficiaries eligible for Indiana’s waiver program, 39 percent had not heard of POWER accounts, and only 36 percent were making required payments, which means that nearly two-thirds were potentially subject to loss of benefits or coverage. In Kansas, 77 percent of respondents supported expanding Medicaid. With regard to work requirements, 49 percent of potential Medicaid enrollees in Kansas were already employed, 34 percent were disabled, and only 11 percent were not working but would be more likely to look for a job if required by Medicaid. These findings suggest that current Medicaid innovations may lead to unintended consequences for coverage and access.

From the Discussion

Administrative costs

While our findings do not shed light directly on the costs of administering health savings accounts or work requirements, such costs are another consideration for Indiana’s POWER accounts and potential work requirements in Kansas or any other state. Implementing these alternative approaches requires additional resources. Even though the POWER accounts in Indiana built upon HIP 1.0, the predecessor of HIP 2.0, the expansion substantially increased per beneficiary administrative requirements. One study indicated that Indiana’s Medicaid managed care organizations had to increase administrative staffing ratios and devote more time to meet the state’s requirements for oversight of the POWER accounts. While Indiana officials have not released estimates of the program’s administrative costs, officials in Arkansas estimated that administrative costs for that state’s health savings accounts in Medicaid were over $1,100 per participating beneficiary per year.

The costs to states of these accounts may outweigh the relatively modest benefits noted among some Indiana respondents in our survey. Similarly, a work requirement that changes behavior for only a tenth of the population but requires verification of employment or exemptions for medical frailty and other hardships for the vast majority of beneficiaries also raises concerns about administrative efficiency.

Of course, these administrative costs may ultimately be outweighed in the Medicaid budget if total enrollment falls substantially as a result of these requirements, which may be another reason that states are considering these changes. While some people would lose coverage because they chose not to comply with the new requirements (for example, to look for work, contribute to a health savings account, or make premium payments), others may be dissuaded from applying or be removed from the Medicaid rolls because of the added administrative difficulty of applying or reenrolling, even though they may meet the program’s requirements.

https://www.healthaffairs.org…

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Comment:

By Don McCanne, M.D.

This survey looked at the impact of work requirements and health savings accounts (specifically Indiana’s POWER accounts) on Medicaid participation using three contrasting states as examples (Ohio, Indiana and Kansas). These innovative programs reduced coverage and impaired access while significantly adding to the administrative waste that characterizes the U.S. health care system.

Patient controlled health spending accounts and work requirements are conservative concepts in which individual responsibility becomes a precondition to receiving health care. Everyone should have health care irregardless of how responsible they may be. The reduction in coverage and impairment of access that these preconditions cause are the opposite of what a well designed health care financing system should be doing.

It is ironic that these results are labeled unintended consequences of these policies when it is clear that the reduction in enrollment or coverage is inevitable and thus should be considered an intended consequence – reducing government financed health benefits by implementing barriers to care. Vice President Mike Pence and CMS Administrator Seema Verma supported these devious concepts in the Indiana Medicaid program, and now they want them implemented throughout the nation, of course with the approval of the respective state governments (through Section 1115 waivers).

The administrative waste of these programs is particularly egregious since the United States already is infamous for creating a proliferation of administrative complexities related to our insistence on perpetuating our highly inefficient, fragmented system of financing health care, heavily dependent on a multitude of private insurance programs plus public programs hindered by the administrative complexity inherent in our dysfunctional multi-payer system.

Why we continue this insanity is perplexing when we know that we could institute a streamlined, highly efficient single payer national health program by improving our Medicare program and then expanding it to include everyone. Should we just concede that it is perplexing and walk away? Well, no. The inertia might be perplexing, but how to fix our system is not. Let’s just do it.

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