South Carolina is Threatening the Healthcare of Thousands–Based on Lies

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In December, while most of us were preparing for holidays and the New Year, South Carolina’s Medicaid agency proposed new work-related reporting rules. These new rules would apply only to parents and caretaker relatives with incomes below 67 percent of the poverty line who are insured through Medicaid. To remain on Medicaid, these parents and caregivers would have to show they are working or involved in an approved job training or volunteer activity at least 80 hours a month or lose their coverage.

SC Appleseed partnered with the Georgetown Center for Children and Families (CCF) to study the full effects of this rule. The results were troubling, with as many as 26,000 people losing coverage over the next five years. The full report can be found here.

Why would South Carolina pursue this policy? The state argues that these parents would be happier, with better mental and physical health if they were employed, citing a Kansas study that showed Medicaid recipients who worked part time were healthier, had better quality of life, and spent less on Medicaid expenditures relative to those who weren’t working.

The problem with this argument is that the studies South Carolina cites show correlation, not causation. Put another way, Medicaid recipients who worked full time weren’t healthy because they worked, they worked because they were healthy.

If the state truly believed part time work would improve Medicaid recipients’ health, they wouldn’t kick people off Medicaid for being unemployed, but instead pursue ways to help these beneficiaries access work. South Carolina could follow states like Montana which created a program known as the Health and Economic Livelihood Partnership link (HELP-link). HELP-link targets state resources toward reducing barriers to work instead of creating unnecessary red tape with the primary purpose of taking away healthcare.

Instead of keeping low-income people insured and helping them find jobs through a sensible and efficient new program, South Carolina has chosen the route of cold, cruel bureaucracy. A bureaucracy that will need to be developed and created and cost the state money that could be put directly into healthcare. This proposal would cause a parent who may not have funds for transportation or child care participate in a program or lose health coverage.  Because our eligibility for the program is so low, when an individual takes this job or increases hours, she could end up with less resources to support her family in addition to losing all health coverage.

But why? The rule is a solution in search of a problem. It seems that the state wants to restrict Medicaid access because it’s politically popular. The reason why it’s popular is that many in South Carolina believe one of five lies about Medicaid and the people who rely on it. Let’s debunk them one by one.

#1: People on Medicaid (and government assistance) refuse to work.

According to the Population Reference Bureau, 45 percent of Medicaid beneficiaries are children under 19, ten percent are over 65, 14 percent are disabled or institutionalized, two percent are recent mothers and 12 percent work full or part time. Put another way, about 70 percent of the people on Medicaid are either too young, too old or physically unable to work, while another 15 percent is already working or working by providing their own child care. Though about 16 percent of recipients fall under the category “other,” it’s not fair to draw any conclusions about this group without evidence.

#2: Medicaid (and other government assistance programs) deter people from working.

This lie is similar to #1, except it goes a step farther, assaulting the value of Medicaid by implying it has a corrosive effect on people’s work ethic. As already made clear, we don’t expect elderly people, disabled people, or children under 19 (70 percent of the enrollment) to work full time.

But among the remaining people who are able to work, Medicaid supports their ability to work and taking it away could compromise that.

One Kaiser Family Foundation study found that “access to affordable health insurance has a positive effect on people’s ability to maintain employment.” Another study conducted by the Ohio Department of Medicaid reported that majorities of non-working adults in Michigan and Ohio that gained coverage through Medicaid expansion said having health care made it easier to look for work. Further majorities of working adults said coverage either made it easier to work or made them better at their jobs.

(chart from CBPP)

Put simply, most people on Medicaid cannot work. Those on Medicaid who are work eligible need Medicaid’s coverage because they cannot afford their own insurance. Otherwise, they’d be forced to choose between low-wage work and healthcare. By not having to worry about the potential costs that would come in a financial emergency, recipients can focus on finding a job, improving their craft and eventually moving themselves out of poverty.

#3 Work Requirements will force those on public assistance to find a job.

Though there’s little data about Medicaid work requirements because it’s a new policy, studies involving Temporary Assistance for Needy Families (TANF) question the efficacy of work requirements. Put simply, if assistance programs with work requirements forced able-bodied people to find employment more than programs without them, we would see areas with work requirement programs having lower unemployment rates compared to areas without work requirements.  South Carolina has found no significant changes to our state’s poverty levels in the twenty years since the Family Independence Program (South Carolina’s work-requirement TANF program) was enacted.  While it has pushed many parents into poverty wage jobs, we have not seen improvement in their ability to earn a living wage or in our state’s child poverty rates.

Rather than take these funds to help support participant families work through child care assistance or job training, we see parents forced to take less-than-full-time minimum wage jobs that do not afford them the ability to fully support their family.  Work requirements modestly improve unemployment for the first two years they are enacted, but those effects become insignificant within 5 years. What’s more, other research suggests “the vast majority of individuals subject to work requirements remained poor, and some became poorer.”

In short, work requirements fail on their own terms. They don’t increase employment. They don’t push people to people find jobs over the long term. They just take away people’s healthcare.

#4: The only people who have to worry about losing their coverage are those who can work but refuse to do so.

Whenever states demand more documentation out of those applying for Medicaid, enrollment sharply decreases. This isn’t because these rules effectively weed out those who don’t need the program, but because they can’t navigate the bureaucratic red tape. As CBPP points out:

…when Washington State increased documentation requirements and made other changes that made it harder to enroll and stay enrolled, enrollment dropped sharply; and it rebounded when the state reverted to its prior processes. Similarly, states reported large declines in Medicaid enrollment, particularly among children, in the months after 2006 federal legislation required states to ask families to prove their citizenship and identity when applying for or renewing their Medicaid coverage. There was no evidence that those losing coverage were ineligible. Instead, eligible people found it difficult to obtain the necessary documents.

Most recently, Arkansas enacted its own work requirement in 2018 and many of the 17,000 people who lost coverage in the first few months were working but didn’t complete the monthly verification. They lost their coverage not because they weren’t following the rules, but because they couldn’t navigate new government red tape. CBPP continues:

The main reason even more Arkansans haven’t lost coverage seems to be that most beneficiaries didn’t have to report any new information to comply with the work requirement: state data already showed they were working or qualified for exemptions. But over half of beneficiaries who weren’t exempt from reporting have lost coverage.

So not only do work requirements fail to improve employment or lift people out poverty, they will almost certainly take away someone’s insurance for unfair reasons

#5: If we want to improve our healthcare system, we have to cut Medicaid and government funded-healthcare programs

If you believe any of the first four lies, you probably believe this one. Cutting Medicaid is a reasonable policy if you believe that it will only hurt lazy people, that it will improve employment, and that the Medicaid deters ambition and personal responsibility. But as we have seen, none of this is true and you can only believe them if you’re woefully uninformed about Medicaid and the people on it.

In reality, Medicaid is a powerful program to combat poverty, provide healthcare and support work. For better or worse, Medicaid and other forms of government spending are an essential part of the healthcare economy. In rural states like South Carolina, Medicaid funding plays an important role in funding rural hospitals. In fact, in states that expanded Medicaid through the ACA, rural hospitals are better funded and less likely to close. In this way, any effort to cut Medicaid spending or lower enrollment would reverse these effects, increasing the likelihood of rural hospital clotures. This would be catastrophic to everyone in the healthcare market, whether they be a hospital, Medicaid enrollee, or someone on private insurance.

Instead of finding creative ways to pinch pennies, lower enrollment and to take Medicaid away, South Carolina should strengthen it, protect it, and join the 36 other states (and D.C.) who have expanded it. We shouldn’t be making policy decisions—with possible life and death consequences—based on lies. South Carolina’s proposed rule won’t lower unemployment, improve health outcomes, reduce poverty, or fix our broken healthcare system. It will just take away health coverage for thousands of people.

If you agree that South Carolina’s proposed work requirement is thoughtless and will only cause needless suffering, please leave a public comment. The comment period is open through January 22, 2019.