Coverage Loss Projections Released for Michigan Medicaid Work Rules

Manatt on Health: Medicaid Edition

New estimates from Manatt Health indicate that Michigan’s Medicaid work requirement, scheduled to take effect January 1, 2020, could cause up to 27% of the state’s Medicaid expansion population to lose coverage within a year—an estimated 183,000 out of 680,000 people enrolled in the Healthy Michigan Plan (HMP). In 2018, then-Governor Rick Snyder (R) signed legislation requiring the Michigan Medicaid agency to seek and implement a Section 1115 work requirement waiver. The Centers for Medicare & Medicaid Services (CMS) approved the waiver in late December 2018, just prior to newly elected Governor Gretchen Whitmer (D) taking office. Michigan is the eighth state granted permission to condition Medicaid eligibility on participation in work and community engagement (CE) activities. In early February, Governor Whitmer informed CMS that she plans to work with the state legislature on changes to the Medicaid work requirement to preserve coverage while promoting work, and to minimize administrative complexity and costs.

States that have submitted similar waiver applications have not always provided detailed estimates of projected enrollment impacts; Michigan did not include an estimate of coverage losses in its waiver application. However, recent experience in Arkansas—where 23% of beneficiaries subject to a work/CE requirement have been disenrolled within seven months of implementation—provides a basis for enrollment impact projections elsewhere, with appropriate adjustments for differences and similarities across states. While the data show that most nondisabled adults subject to work requirements are either working or exempt from the requirements, Arkansas’s experience shows that proving compliance or establishing an exemption is a major stumbling block causing a large portion of people to lose coverage. Key findings from Manatt Health’s analysis of the potential impacts of Michigan’s work requirement include:

  • An estimated 61% of the 680,000 people enrolled in the Healthy Michigan Plan, which covers the state’s Medicaid expansion group, will be required to self-report an exemption or qualifying work/CE activities. For the remaining 39%, the state will provide exemptions using information it already has available on beneficiaries (referred to here as administrative determinations).
  • An estimated 174,000 people each month will be found noncompliant for failure to meet the reporting obligations of Michigan’s work/CE requirement.
  • Depending on how many months their reporting issues continue, an estimated 61,000 to 183,000 people—between 9% and 27% of the state’s Medicaid expansion population—will lose Medicaid coverage over a one-year period. The high end is consistent with the experience in Arkansas to date, but the range reflects the uncertainty of impacts as work requirements are implemented and policies and practices evolve over time.

Michigan’s Medicaid Expansion and Work Requirement

Michigan expanded Medicaid coverage to adults with incomes of up to 138% of the federal poverty level (FPL) effective as of April 2014, using waiver authority to establish the Healthy Michigan Plan with features not otherwise permitted in Medicaid, including new premiums for beneficiaries and incentives to encourage healthy behaviors. In early 2018, state law required the Michigan Medicaid agency to seek and implement a work requirement waiver. The waiver was approved at the end of December 2018.

Michigan’s legislation requires most Healthy Michigan Plan beneficiaries to participate in 80 hours per month of qualifying activities as a condition of Medicaid eligibility, beginning January 1, 2020. A number of exemptions are provided, and there is a monthly reporting obligation for beneficiary verification of qualifying activities. Reporting will be through an online portal or by phone. After three months of noncompliance (including noncompliance with reporting) in any 12-month period, individuals are disenrolled; they may re-enroll once they have become compliant for at least one month or have been found exempt.

Arkansas’s Experience With Medicaid Work Requirements

Arkansas’s work/CE waiver was approved in March 2018 and has been implemented on a phased basis beginning in June 2018. As with Michigan, the state’s work/CE requirement is 80 hours per month and applies to expansion adults, but Arkansas’s exemptions and qualifying activities are more expansive. For example, all individuals over age 49 are exempt in Arkansas, compared to those over age 61 in Michigan; anyone living with a child under age 18 is exempt in Arkansas, compared to caretakers of children under age 6 (limited to one parent at a time) in Michigan. Similarly, Arkansas beneficiaries who are required to report work/CE activities must do so monthly, but the state has less frequent reporting in some cases and more extensive administrative determinations than Michigan has. Initially, Arkansas only permitted online reporting; as of December, people were permitted to also report by phone. If a beneficiary has three months of noncompliance or nonreporting in the calendar year, the individual loses coverage for the remainder of that year. The vast majority (more than 90% in some months) of people required to report in Arkansas did not meet the reporting requirements, and, in total, nearly a quarter (23%) of beneficiaries subject to the work/CE requirement in 2018 lost coverage.

Estimates of Enrollment Impact in Michigan

Based on a combination of Michigan-specific data and Arkansas experience to date (adjusted to account for similarities and differences between the states), an estimated 61,000 to 183,000 HMP beneficiaries—between 9% and 27% of Michigan’s Medicaid expansion population—will lose Medicaid coverage over a one-year period. Key inputs and considerations in Manatt Health’s development of estimates included:

  • Data provided by the state on the number of HMP beneficiaries likely to have an exemption determined administratively
  • Michigan’s less expansive exemption criteria (regarding the breadth of exemptions as well as the frequency of beneficiary verification) and qualifying activities relative to Arkansas’s
  • Michigan’s more limited administrative determinations of compliance relative to Arkansas’s
  • The fact that Michigan will have more avenues for self-reporting of compliance and exemptions than were available during the first six months of Arkansas’s implementation
  • Uncertainty with regard to the trajectory of reporting and compliance over time

Conclusion

Work requirements are new to Medicaid, but Arkansas’s recent experience provides important insight into how they may affect coverage in Michigan and elsewhere.