NC Budget and Tax Center

Federal court decision on Medicaid waivers at odds with N.C. General Assembly

Last week, a federal judge in Washington, D.C., blocked Medicaid waivers submitted by Kentucky and Arkansas, ruling that the waivers were “arbitrary and capricious” and that they undercut the objective of the Medicaid program: providing “medical coverage to the needy.” The waivers, which had been approved by the Trump Administration, allowed the states to place harsh work reporting requirements as conditions for low-income workers to receive health care.

Since Arkansas implemented the harsh requirements last year, as many as 18,000 people have lost health coverage, largely for failing to meet the reporting requirements. Also, state officials have failed to prove that their provisions are having the intended effect of helping people to find work. This should come as no surprise. Research from the Center on Budget and Policy Priorities finds that coverage increases the likelihood that an unemployed worker will be able to find and keep employment. When people have access to treatment for chronic illness, it increases their ability to hold a steady job.

North Carolina is no stranger to conversations around restrictions to Medicaid for low-income families and workers. Introduced just last week, Senate Bill 387 proposes to place work reporting requirements on low-income parents with young children who currently receive Medicaid. The bill would require NC DHHS to submit a waiver request to the federal government by Oct. 1, containing the work requirements just deemed illegal by the court.

This change in policy, if allowed to go forward, would not only be expensive to enforce and difficult to navigate, it will legitimately threaten the well-being of not just parents, but the children who rely on them.

In addition to imposing work-reporting requirements on existing Medicaid participants, legislators have in the past suggested that these barriers be included as part of  any Medicaid expansion under the Affordable Care Act, thus creating greater administrative costs and reducing the effective closure of the coverage gap in our state.

In general, work-reporting requirements ignore the fact that a significant number of Medicaid recipients who can work are already working. According to the Working Poor Families Project, three out of every four low-income families in North Carolina have at least one family member who works. But another study finds that even among those working at least 1,000 hours a year, one in four would be at risk of failing to meet work requirements due to unpredictable work scheduling and temporary work.

What does this court decision mean for North Carolina?

While last week’s decision only directly applies to the waivers in Kentucky and Arkansas, it sets a legal precedent that applies to states that apply for similar waivers in the future. Although the Trump Administration has said it will continue to approve work-reporting requirements, it is highly likely that North Carolina could spend significant resources developing, preparing to implement and then litigating policies that may never be allowed to take effect.

There are plenty of good reasons why work-reporting requirements for Medicaid recipients are a bad idea. They’re expensive to enforce, unfairly punish workers unable to find sufficient work, and have no evidence of helping people to find work.

But more importantly, these provisions undermine the entire goal of closing the coverage gap and creating healthy communities.

Brian Kennedy II is a Public Policy Analyst for the Budget & Tax Center at the N.C. Justice Center.

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