Federal and state antipoverty efforts over the past decade can be characterized as a relentless effort to enroll low-income Americans in three programs: Medicaid, food stamps (SNAP), and the Earned Income Tax Credit. The most compelling argument for doing so was that these programs would act as “work supports,” supplementing wages in ways that would encourage work and improve quality of life.
Administrator of the Centers for Medicare and Medicaid Services Seema Verma speaks after being sworn in by US Vice President Mike Pence in Washington, US, March 14, 2017. REUTERS/Kevin Lamarque
But what is a work support on its own can become a work replacement when combined with other government assistance. That is the problem the Trump administration must address if it wants to increase the labor force participation rate (especially among working-age men), reduce poverty, and increase the well-being of non-working Americans.
This week we saw an important step in this effort when Seema Verma, who runs the federal Department of Health and Human Services’ Centers for Medicare and Medicaid Services, introduced some new thinking about Medicaid administration. In a speech on Tuesday to the National Association of Medicaid Directors, Verma outlined a vision of Medicaid which included encouraging work for able-bodied adults.
Some proponents of continued Medicaid expansion will condemn this vision as a harsh way to make health insurance harder for poor Americans to get. But it is important to note that Verma advocated only “community engagement,” meaning that able-bodied adults could be asked to do a variety of activities, from volunteering to job training for a limited number of hours a week, in order to comply. This encourages future full-time labor and could provide an opportunity for human capital development, which have been lacking from Medicaid policy. It could also help improve health outcomes, as work has been shown to do.
After expansions to Medicaid over the past few years, spending on the program now totals well over $550 billion per year, consuming nearly 30% of state budgets nationwide and elbowing out other worthwhile state goals like public education, child care, and economic development. Meanwhile, despite the large government expense, Medicaid is not doing a great job of improving health outcomes, or even health care; as Verma points out, more than a third of doctors won’t even see Medicaid patients.
Verma identifies the major problems with Medicaid as it is currently run: It has expanded to include as many people as possible, discouraging the alternative of employer-provided insurance (which is a good incentive to work), easing the burden of having health insurance while failing to provide improved health care for those who truly need it. In her words, Medicaid is too often “a card without care,” and one that makes it easier to stay out of the labor force at that.
The new vision of Medicaid helps solve those problems by shifting people off Medicaid enrollment and into private insurance through work, beginning with states gaining flexibility to nudge able-bodied adults on Medicaid into the labor force. For the solvency of Medicaid, the reservation of public health insurance for those who truly need it, and for the dignity of every individual, work encouragement — even just a few hours a week of job searching, as Verma recommended — is a worthwhile goal.
Additionally, Verma proposed increased state control of Medicaid administration more broadly, allowing states to innovate and tailor their public health insurance rules to the needs of their populations. Asking states for proposals that will help them innovate with policy solutions to help people on Medicaid move into situations of economic mobility is a good way to move toward a system that better helps individuals help themselves.
By encouraging work and allowing state innovation, Verma is charting a new path for our biggest social safety net program.
