Opinion | Beware of unintended consequences of Michigan Medicaid work demand

Update: Have an opinion on Michigan’s Medicaid work rules? Weigh in quickly.

On April 10, President Trump signed an Executive Order designed to add work requirements to all public assistance programs. Yesterday, the Michigan Senate State Competitiveness Committee reported out a bill that would require work, education, or other community engagement activities as a condition of eligibility for many Medicaid recipients. And today, the Michigan Senate approved that bill with no amendments.

The Michigan Senate Fiscal Agency estimates that as many as one million of the state’s Medicaid recipients could be affected by the proposed requirements. While encouraging work and other engagement is undoubtedly an admirable goal, it is important to look at what we’ve learned from other work requirement initiatives, and to use those findings to shape the best public policy to achieve that goal.

For 30-some years, America’s eligibility criteria for health insurance and cash assistance were similar—with both programs basing benefits on income and other characteristics. But in the late 1990s, in an effort to “end welfare as we know it,” the programs diverged. The resulting welfare reforms put an end to cash aid entitlements, linking cash assistance to work requirements through a new program: Temporary Assistance for Needy Families (TANF).

Related Michigan health care, safety net stories

TANF was intended to help families exit welfare through employment and, in the early years, it seemed to be working. But as the boom times of the 1990s faded, jobs became increasingly hard to find. States began to focus on cutting caseloads, rather than helping families find work. The modest employment gains did not persist; those with physical and mental health conditions did not find jobs; and the administrative burden of tracking and verifying hours overwhelmed caseworkers.

Today, there’s lots of evidence that the 1996 reform actually hurt families at the very bottom. Nationally, for every 100 poor families, only 23 receive cash assistance now. Across the country, extreme poverty has more than doubled. And the number of families on food assistance—families with no money to pay for things like rent, toilet paper, or clothes—quadrupled to 1.3 million by 2016. With diminished cash, families in poverty have done all sorts of things to survive. They sell their blood plasma; they sell their food stamps (a felony); and in extreme cases, they use sex to keep a roof over their heads.

In Michigan, the decline in TANF has been particularly large, from serving 88 out of every 100 poor families with children in 1996 to just 14 out of every 100 poor families in 2016—well below the national average. Our analysis finds that nearly 65,000 kids on food assistance live in families reporting no cash income.

Michigan has one of the largest populations of school children who are homeless or unstably housed. Yet the state spends only 10 percent of its TANF dollars on basic assistance, and redirects a third of TANF dollars to “other services,” including college scholarships that go to higher income students.

Ron Haskins, one of the early champions of welfare work requirements, now says that of the program’s two central aims—to “provide income support to poor families while they struggle” and to “help people achieve self-sufficiency”—TANF “now seems to be achieving neither goal.” He recommends proceeding with careful study when it comes to new work requirements.

Peter Germanis, a former Reagan staffer, argues that although work requirements may have sent an important symbolic message, the work requirements that were established under TANF were “unreasonable,” “dysfunctional,” and  “not about work.” Germanis goes on to say that “there can be no doubt that TANF work requirements are ‘broken’ and that TANF is not a model for reforming the rest of the safety net.”

Because rules prohibit the use of federal Medicaid funds to provide supportive services—like childcare, transportation, or training—that would help people find and engage in work, adding work requirements to Medicaid without investing additional state dollars in work support programs will likely only exacerbate the problems that emerged after welfare reform—all while creating new administrative burdens for the state and for its residents.

Are work requirements actually necessary to encourage Medicaid beneficiaries to get and keep jobs?

National estimates indicate that almost 80 percent of “able-bodied” non-elderly adults with Medicaid are in working families and 60 percent are working themselves. University of Michigan researchers at the Institute for Healthcare Policy and Innovation have found that most adults covered under Healthy Michigan are already working or in school.

And both studies suggest that those who aren’t working have major barriers to employment, including chronic health conditions, physical or mental health problems, or full-time caregiving responsibilities. For example, among Healthy Michigan enrollees who were out of work, one third were in poor health and three quarters reported a chronic health condition.

Randomized controlled trials, gold standard studies that use test and control groups to precisely measure the impact of a program, show that insurance coverage may actually be more effective than work requirements in helping families get and keep work. One such experiment found that Medicaid coverage reduced depression—a major barrier to employment—by almost 50 percent (though the jury is still out on whether physical health improved). Another, the RAND Health Insurance Experiment, found that less-educated people in free healthcare insurance plans were more likely to increase their participation in the labor force.

There is no question that work is important to personal dignity and that encouraging self-sufficiency—independent of state support—is a worthy goal. Michigan seems poised to move forward with a request to the federal government to amend the state’s Medicaid program to include work requirements.  

We hope this proposal carefully balances the costs and benefits of this policy change and incorporates the program components most likely to make such a requirement successful, without adding costly and unnecessary administrative costs for taxpayers and barriers to care for consumers.

Luke Shaefer is an associate professor of public policy and director of Poverty Solutions at the University of Michigan. Renuka Tipirneni is an assistant professor of internal medicine at U-M’s Institute for Healthcare Policy and Innovation. Marianne Udow-Phillips is executive director of the Center for Health Care Research and Transformation.

Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan.

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Comments

Ren Farley
Fri, 04/20/2018 - 9:05am

This is an excellent commentary about the proposed imposition of new work requirements. I wonder if those calling for these work requirements will also consider the possibility of
requiring work or job training to quality for Social Security benefits? The over 65 population is much healthier now than in the past.

Sarah Scholl
Fri, 04/27/2018 - 9:41am

There are a large number of people over 65 working, there is also a large number of them caring for elderly parents in a state that has many who are unable to qualify for help in senior facilities. So we should penalize those who have paid into Social Security, being told this would provide for them as retired seniors even more than we do now? Many of us were told we would have the funds to live if we paid into Social Security and we did, which we had no choice in paying. Now we are being told we are being taxed, paying for the Medicare system, which we also paid into, and you want us to have to work (which we have done, most of us since we were teenagers) and handle our more elderly parents.
I have spent my life working, caring for others and continue to work, with no plans of retirement, since Social Security is not enough to retire on. What more should we require of those who are ill, unable to work, or dealing with situations that impact their lives to a degree that makes working almost impossible?

Peter
Fri, 04/20/2018 - 9:25am

Thanks for this carefully researched essay. I am so tired of our legislators using "bumper sticker" slogans to attack the poor as unworthy and then design programs that are in the end more costly and less effective.

Jennifer
Mon, 04/23/2018 - 4:15pm

Peter, thanks for your comments and your ability to see through the marketing and to properly use the data outlined in the article. The authors are top notch and experts in the field of Human Services. I hope they are able to meet with legislators to help spread accurate information.

Lola Johnson
Fri, 04/20/2018 - 10:01am

I wonder if the real goal of work requirements is ever stated. If 1 million people are suddenly forced to "find work", this would certainly ease the need for workers in the state; Without having to, you know, offer a living wage. There is no requirement as to how much the job must pay, only the number of hours worked. These bills that put requirements upon poor folks without helping them meet the requirements are not there to serve the poor.

Linda Schmidt
Fri, 04/20/2018 - 11:08am

I wish the paragraph dramatizing the most desparate behaviors of a tiny slice of people in extreme poverty would have been avoided. I have no doubt that this will reinforce already intransigent stereotypes. Focusing on their more generalized outcomes that are also more soundly supported by research would be more helpful. For example, outlining just how the child care market has consistently priced out more and more vulnerable families and the real-life impacts on children. Michigan child death review reports certainly support the absence of reliable child care coupled with the existential threat of not meeting work requirements is a reliably correlated factor in children actually dying from unsafe care or no care at all. Secondly, there is no evidence that the $60-70M spent on monitoring work participation actually has an effect on employment. Reports from agencies charged with this work do not include any acknowledgment of regular labor market trends and fail to identify the proportion of participants who would likely have gotten a new job without any state monitoring and enforcement whatsoever. Finally, we need to make a stronger case that we need people to have access to healthcare. The state is more fiscally sound when access to regular care is normalized for everyone. When people experiencing poverty access Medicaid and participate in preventive care they are contributing to our larger community in tangible ways by helping reduce downstream costs. The last thing they need is to be punished for doing that by having to report on how they spend their time in a process that has no proven benefit. The budget weaknesses that short-term "savings" in Medicaid may paper over will resurface with a vengeance in a couple years - AKA after the next elections. The clock is ticking on those budget gimmicks that are supporting the Michigan Comeback narrative. Making people living in poverty suffer so that we can hit snooze on that alarm is shameful.

Arjay
Fri, 04/20/2018 - 11:47am

The writing and recent speeches on the news leave me a little confused as to how many are really affected. Michigan has roughly 10 million residents. Sen Coleman Young was seen speaking to the senate saying that the number of medicaid recipients in Michigan is above the national average, and this story says the national average of working medicaid recipients is 80%. Some percentage will be exempted by the provisions in the law that say caregivers for children under 6 are exempt as well as a few other provisions. So in numbers, how many medicaid recipients in Michigan are there, and in numbers, how many are affected by the requirement to be able bodied and work?

J Hendricks
Fri, 04/20/2018 - 11:55am

I continually read stories of people working two or three jobs to take care of their families. Good for them! That is the kind of personal responsibility that make them into the kind of employee firms want to hire, and that serve them well by allowing them to move up to better jobs; it also helps to make this country strong - back before we could use endless medical excuses (depression?, spurious excuses to qualify for social security disability, etc.) There was a mind set of doing whatever it took to get the job done. Now the mindset is to find some qualifier to find the easy way out.
The Michigan economy is improving; multiple "Help wanted" signs in my community - with scant takers. Why? Even when things were tough in Michigan, there was nothing to stop hard workers from jumping in their car and heading to North Dakota or Texas to hire on at multiple oil and gas opportunities.
I do not discount the fact that there are truly people in need that we have to help. I also believe it is the state's responsibility - NOT Washington - to devise solutions - and fund them adequately.
In times past, starvation was a hellova good motivator to find work - anywhere, under any conditions. While I would not propose going in that direction, we do need to be careful that we recognize the human tendency to take the easy road; and if by policy we remove key incentives to work by providing free housing, free food, etc., then we create conditions that argue - 'why bother with the inconvenience of work?'

Zeke
Fri, 04/20/2018 - 3:07pm

Well JH - its people like you that have blinders on - who have lost perspective - who are the problem. Did you read the above report. Here are the important high lights -
"Today, there’s lots of evidence that the 1996 reform actually hurt families at the very bottom. Nationally, for every 100 poor families, only 23 receive cash assistance now. Across the country, extreme poverty has more than doubled. And the number of families on food assistance—families with no money to pay for things like rent, toilet paper, or clothes—quadrupled to 1.3 million by 2016. With diminished cash, families in poverty have done all sorts of things to survive. They sell their blood plasma; they sell their food stamps (a felony); and in extreme cases, they use sex to keep a roof over their heads.
In Michigan, the decline in TANF has been particularly large, from serving 88 out of every 100 poor families with children in 1996 to just 14 out of every 100 poor families in 2016—well below the national average. Our analysis finds that nearly 65,000 kids on food assistance live in families reporting no cash income."
Politicians and Business Leaders are mi-optic. By that I mean they don't understand the basic principles of economics. The GDP is driven by purchases highly dependent on U.S Citizen buyers. A high GDP allows us to pay down our National debt. Export sales are dropping due to poor economics in Europe who can't afford U.S. products now for many reasons and if Trump protectionists measures - can you say tariffs - expand that will cause further reductions in export sales. Today seniors citizen purchases have dropped because they are scared of what is being proposed in Washington by the politicians there in control. Senior citizens purchasing power will be further reduced if the proposed reductions in Medicare Coverage, the intended reductions in SS and the proposed reductions in Medicaid take place. They won't have the money to buy what they used to. Purchases will be needs - not wants that used to drive GDP. Then there are the poor who as they increase in numbers and percentages will only be able to purchase part of what they need and no wants. They need some help to dig out for their children and themselves. Failure to understand the basic needs to survive means a larger amount of people in the lower class until we have a society stratified by extremes which will forecast the end of our Country. So when will Politicians and Business Leaders understand that we the people means everyone needs to do reasonably well by their own standards if our Republic is to survive. The top 5% earners won't be able to sustain a 3% GDP by themselves. People need to be able to have hope and some reasonable help to climb up - not further reductions.

Kevin Grand
Fri, 04/20/2018 - 3:11pm

I see that the poverty hobbyists are at it again.

In their worldview, it is perfectly acceptable for the productive members of society (and most times their spouses) to have to punch a timeclock for 40 hours (or more) a week in order to fund their government coerced philanthropic endeavor. And I'm absolutely certain that those productive members don't have any family members to care for or seek to better themselves through training or education.

But to require the recipients of said benevolence to adhere to a mere fraction of that requirement...SHUDDER!!!

The benchmark for any success of a government program should not be how many people are on it, but rather how many people are not.

Judging by the effects of these programs, they only promote the behaviors they claim to address rather than reduce them.

Take for example TANF. When the poverty hobbyists de-stigmatized out of wedlock births by offering benefits, the number of two-parents families actually fell, making the overall problem far much worse.

https://aspe.hhs.gov/report/indicators-welfare-dependence-annual-report-...

https://factfinder.census.gov/faces/tableservices/jsf/pages/productview....

Government programs also tend to have the problem of multiplying and becoming redundant. Back in January, The Washington Times published an op-ed by Vanessa Brown Calder, policy analyst at the Cato Institute, which illustrated not only how bad this redundancy had become, but that the intended recipients are not the only people who benefit from all of this spending:

“Not only are current federal programs poorly overseen or mismanaged, they are often duplicative. Consider the 342 economic development programs; 130 programs serving the disabled; 130 programs serving at-risk youth; 90 early childhood development programs; 50 homeless assistance programs; and 40 separate employment and training programs, just to name a few federal examples. To contend that running this many unique programs with unique rules is anything but wasteful requires willful delusion.

Many of these programs have nearly exact overlapping missions. Consider the five federal programs with the purpose of providing school meals: the National School Lunch Program, the School Breakfast Program, the Summer Food Service Program, the Child and Adult Care Food Program, and Special Milk. Lobbyists need each to exist in order to protect their own benefit streams. And as researchers point out, legislators have reason to like these inefficiencies because more individual programs mean more legislation to take credit for.”

https://www.cato.org/publications/commentary/why-welfare-needs-reform

The poverty hobbyists authors also failed to mention the waste in the programs that they love to promote.

In Michigan for example, the most recent statistics for TANF had an “improper payment rate” (AKA fraud) at 40%.

https://oig.hhs.gov/oas/reports/region5/50600068.pdf

Try replicating that level of incompetence in your place of work in the private sector and see how long YOU remain employed?

Most Michiganians are working 40 hours (or more) already. You cannot pass by a business nowadays (i.e. restaurant, retail or motel) without seeing an advertisement out in front seeking employees. Many of those have on-the-spot interviews. So maintaining that “lack of work” is somehow a factor in the equation just doesn’t hold up.

If you expect the government to take from those who work for a living, in order to give to someone else in order to assuage your conscience (ironic since tax day was this week), at the very least, you should hold them to the same requirements that the productive members of society already follow.

sam melvin
Mon, 04/23/2018 - 8:54pm

with 42 milloin american are POOR state....made poor by goverment..not raise the Wages to $ 15 and hour, also insured that Mothers get there childsupportchecks
since ONLY 20% of mothers get it on a monthly base.
question Seniors over 65 to work....Well we work and earned our low SS payments.BUt sinc e2018 is here and Our Social Securety LOCKBOX money is Due from Department of Treasury raided in 2004 to bailOUT Aid and the bad big banks, So with the assistenceof State Goverment that SS money should be rollingIN.and grandma finally can get a new dress! the monthly SS checks of $ 5000.should cover all senior an dat a saving to the State of Foodstamps.heating cost.ect. so kindly call congress and get the Ball?money rolling IN!

Carol
Sat, 04/28/2018 - 10:46am

Michigan just a Kock Brother possession - disgusting !!!!! Just the mission statement of Bridge MI is from libertarian philosophy play book . This state is completely gone because of it. Really disgusting.