Are Work Requirements and Premiums On the Horizon for Medicaid’s Able-Bodied?

Two years ago, I wrote about a variety of ways Missouri could reform its Medicaid program. From health savings accounts to regulatory reform, the paper presents a wide-ranging and integrated proposal for delivering better care to Missouri’s neediest patients at a better price for taxpayers. Could other reforms poke through too? Absolutely, and two of the more prominent alternatives right now have to do with work requirements and premiums.

The question of the cost of Medicaid in the years ahead is perhaps the biggest problem that work requirements and premiums address. The Department of Health and Human Services (HHS) forecasted in 2013 that the cost of Medicaid will continue to exceed the rate of inflation for at least the next decade because both the cost of services and the number of beneficiaries are rising. On that trajectory, the total cost of the program is set to nearly double to approximately $900 billion in spending annually by 2022, from about $450 billion in 2013.

Access for our most vulnerable is already being squeezed by today’s program, and this upward trend in spending—in contradiction, of course, to the “cost curve bending” claims about Obamacare by its supporters—does not bode well for the sustainability of the Medicaid status quo in the years ahead. Something will have to change to mitigate these spending pressures.

In this context, it’s very possible that work requirements and premiums for at least some able-bodied Medicaid beneficiaries could become the norm in some states. On the one hand, a work requirement for the able-bodied would ensure that a beneficiary would have a stream of income to help support themselves and supplement their welfare benefits; on the other hand, a modest premium would not only give beneficiaries a stake in their care, but also a reduced benefit cliff as their economic prospects improve. Different proposals have set different thresholds for work and premiums, but the underlying idea is pretty simple—if you can help pay for your care, you should, and because you are, you’re also helping to ensure that care for the most vulnerable is more available and more fully funded.

Unfortunately, state Medicaid plans that include robust work and premium requirements have a tendency of being rejected or gutted by the HHS right now. Whether the HHS continues to do so is an open question; the department may view these reforms as unnecessary right now, but as Medicaid spending spikes in the years ahead, robust work and premium changes at the state level may look better and better as a way of ensuring the poorest have access to care. They’re certainly ideas worth considering—and considering sooner rather than later.