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The Case for Medicaid Work Requirements

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The Case for Medicaid Work Requirements

The Wall Street Journal January 17, 2018
Health PolicyMedicare/Medicaid
EconomicsOther

The test of an antipoverty program isn’t how many people it covers but how many it helps to self-sufficiency.

Saturation coverage of what the president did or did not say about immigrants and their homelands may have given the impression that nothing else of much significance is happening in Washington. But few things are more important to America’s financial health than entitlement reform, and last Thursday the Trump administration backed state work requirements for recipients of Medicaid, which covers more Americans than any other health-care program.

Medicaid dates to 1965, and the intention was to provide medical care to the truly needy. It was part of Lyndon B. Johnson’s “war on poverty,” a broader effort both to address the privations of the poor and to reduce government dependency. Instead, dependency has increased. According to the Kaiser Family Foundation, Medicaid now insures more than 70 million people, or 1 out of 5 Americans. The number of beneficiaries has more than doubled since 2000.

Federal and state governments share Medicaid costs. States pay for the services Medicaid recipients receive, then get money from Washington to offset part of those expenses. Crucially, the entitlement is open-ended, meaning that additional state enrollees automatically trigger more subsidies from Washington.

Until recently, Medicaid eligibility was mostly limited to impoverished women and children, the disabled and seniors in nursing homes who couldn’t afford long-term care without government assistance. In 2010, however, ObamaCare extended eligibility to healthy, working-age adults who were living above the poverty level. Today, Medicaid is not only the third-largest program in the federal budget but also the fastest-growing. At the state level, where balanced budgets are legally required, ever-growing Medicaid expenses have left less money for things like education and infrastructure that ultimately are more important to reducing the level of poverty.

In a major policy shift last week, the Trump administration told states that they could impose modest work or job-training requirements on childless adults without disabilities who receive Medicaid. A guidance letter released by the federal Centers for Medicare and Medicaid Services says that the new policies aim to promote “work and community engagement” among able-bodied adults and “help individuals and families rise out of poverty and attain independence, also in furtherance of Medicaid program objectives.” Imagine that.

States are not required to impose new work rules, which could be satisfied by everything from skills training to volunteering or attending school, but the Trump administration is committed to giving governors the freedom to innovate. The Democrats who say governors can’t be trusted with these waivers are selectively distrustful. It’s not waivers per se that cause a stink. It’s waivers that allow states to do things that the left opposes philosophically. Democrats have no problem with states being granted permission to expand entitlement eligibility, regardless of the costs.

The chief complaint from liberals is that attaching work conditions to government benefits only hurts the poor and vulnerable, but the horror stories they predict never seem to materialize. The simple reality is that low-income individuals respond to incentives just like everyone else. And nudging people who are physically capable of holding down a job into the workforce has a track record of increasing incomes and lifting people out of poverty.

Time limits and work mandates were key parts of the 1996 welfare reform that opponents said would destroy America’s safety net. Instead, we witnessed significant and sustained reductions in welfare caseloads and increases in labor participation and incomes among single moms. After Maine attached work requirements to able-bodied food stamp recipients in 2014, their incomes more than doubled on average, and their participation in the program fell by 71%, reports the state’s former commissioner of health and human services. When Kansas made a similar move a year earlier, the number of able-bodied adults on food stamps fell 75%, according to a study by the Foundation for Government Accountability.

Robert Doar, who administered welfare programs in New York City under former Mayor Michael Bloomberg, cautions that the reform’s impact will be limited because most Medicaid recipients are elderly, disabled or children. Nevertheless he welcomes the move if for no other reason than that it potentially changes how we measure the program’s success. Properly understood, a successful antipoverty program is not one that enrolls the most people but one that helps people leave poverty.

“We’re talking about working-age adults who apply to the program because they say they have no earnings, and we ought to see if we can help them find work,” said Mr. Doar. “For a long time these programs were told we could only do one thing at a time, and that is to enroll people. I think they can do more than just sign them up.”

This piece originally appeared in The Wall Street Journal

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Jason L. Riley is a senior fellow at the Manhattan Institute, a columnist at The Wall Street Journal, and a Fox News commentator.

Photo by Alex Wong / Getty Images
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