Commentary, Legislature, NC Budget and Tax Center

GOP Medicaid bill takes a massive step in the wrong direction

Rep. Donny Lambeth, R-Forsyth, presenting the GOP’s Medicaid bill Tuesday.

Yesterday, legislators filed a new version of Medicaid expansion, House Bill 655, titled “NC Health Care for Working Families.” This bill imposes even harsher work compliance provisions on low-income and poor North Carolinians than previous versions.

Specifically, the bill follows the work reporting requirements seen in the Supplemental Nutritional Assistance Program (SNAP, formally known as food stamps). This raises a serious concern, considering that extensive research has demonstrated just how broken the SNAP program’s work provisions are.

A new report from the nonprofit ideas42 points out that not only do work requirements not help people to find jobs, the provisions seen in the SNAP program have the exact opposite effect. The report finds that:

  • The burdensome compliance of requirements dramatically increases the cost of obtaining assistance. Under SNAP rules, people are required to prove that they worked 20 hours a week. Lost paperwork, missed notices, and clerical errors have resulted in a significant number of people losing benefits, despite the fact that they’ve actually fulfilled the requirements. Additionally, many low-wage workers lack access to predictable schedules, paid leave, and other basic protections. This means that, regardless of a worker’s best efforts to comply, they may easily fall short due to circumstances completely out of their control.
  • Rigid work requirements fail to recognize that people living in poverty know best how to prioritize their time. People living in poverty face tremendous everyday pressures of deciding how to best use their time in order to fulfill their obligations and to make ends meet. The rigid 20-hour work requirement does not reflect the reality that a disproportionate number of low-wage workers are employed in seasonal industries with unpredictable hours, or that they are more likely to take time to care for sick or aging family members. Rather than attempting to legislate the schedules of North Carolinians living in poverty, policy makers should provide them with the tools to make decisions and choices to help lift them out of poverty.
  • These policies rely on and reinforce harmful and misguided beliefs about people living in poverty. Proponents of work requirements believe that these provisions will force people uninterested in work to find jobs. This presumption that this belief is built on could not be further from the truth. The U.S. Census Bureau found that less than 0.3 percent of SNAP recipients aged 18-49 reported that they are not working because they are not interested. Behavioral research has found that people living in poverty actually make better and more rational choices in regards to money than people with high incomes. This is because they have to. When living in poverty, there is very little wiggle room for wasteful or poor choices.

Rep. Donny Lambeth, R-Forsyth, states that the work requirements are a political necessity, arguing: “There are things we as legislators have to do in order to get things done.” This thought, however, does not reflect the emerging national conversation on work reporting requirements in our safety net programs.

Last year, proposals in Congress to make SNAP’s work requirements even more restrictive met opposition from both Republicans and Democrats. In a show of bipartisanship, legislators decided that more work requirements were not a good idea, and that making sure that struggling people receive the help they need was a higher priority.

Just last month, a federal judge ruled that similar Medicaid work requirements in Arkansas and Kentucky were illegal and that they undercut the entire objective of the Medicaid program to provide “medical coverage to the needy.” Research shows that when people have access to critical supports like food and healthcare, they are more likely to find gainful and steady employment.

Work requirements are an ill-informed attempt to legislate behavior and do not reflect the realities of people living in poverty. In fact, the science shows that they effectively take away the ability of people to make good, rational decisions. If our legislators are truly in the business of helping to improve the lives of North Carolinians, they will listen to the research and evidence and reject these harmful provisions.

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

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? Read more

Commentary, NC Budget and Tax Center

There’s no way to fix Medicaid work reporting requirements

The conversation about expanding Medicaid in North Carolina has been growing, but proposals to make the program less accessible and less efficient are still casting a shadow. Work-reporting requirements are an unnecessary and harmful barrier that would keep North Carolinians from accessing medical coverage.

Evidence — from across the nation and from other programs like food assistance — have demonstrated that not only do requirements to report work activities target people who have difficultly navigating administrative red tape, but they also punish people who are working but may not have a reliable work schedule or steady employment.

A report from the Center on Budget and Policy Priorities details the lessons learned from seven states that expanded Medicaid but chose to restrict access through work-reporting requirements. They found that even when policymakers attempted “fix” work reporting rules, the unintended consequences left far too many eligible people without health coverage:

“Medicaid work requirements can’t be fixed: other states that implement work requirements will see the same unintended consequences as Arkansas is experiencing. After evaluating the initial data from Arkansas, the non-partisan Medicaid and CHIP Payment and Access Commission recommended that the Administration immediately pause on allowing any more people to lose coverage in Arkansas as well as on approving work requirements in other states.  Both the Trump Administration and state policymakers should heed that recommendation.”

Read the full report here: Medicaid Work Requirements Can’t Be Fixed: Unintended Consequences Are Inevitable Result

Brian Kennedy II is a public policy analyst for The Budget & Tax Center at the N.C. Justice Center.

NC Budget and Tax Center

Temporary re-opening of government is no solution

Last Friday afternoon, the President announced he would support a bill that would temporarily open the government until Feb. 15. Quickly following the announcement, both the House and Senate moved forward legislation to approve this measure and the President signed the bill late Friday evening.

The temporary re-opening of government agencies will allow federal workers to return to work and receive back pay while lawmakers continue to negotiate a longer-term funding proposal.  Still on the table and strongly desired by the President is funding for the proposed southern border wall that precipitated the original shutdown.

The re-opening of government is an important first step in recognizing both that the federal government provides critical services such as protecting air travel and providing food assistance to families, and that federal workers, like all workers, play a critical role in the functioning of our economy.  

It is important to note that bouncing back will not be easy and that:

  • Some government agencies will face long backlogs that will take weeks, if not months, to address.  
  • Uncertainty remains such that programs and services for those Americans (and North Carolinians) most in need should likely continue to prepare contingency plans should government shutdown again.
  • Economic damage has been done.

Given the temporary nature of the measure and the seeming lack of change in positions in the original debate, this measure does not take away the possibility of a future shutdown (or an emergency declaration for that matter). Both have been threatened should Congress not approve the border wall that President Trump has demanded.  

In that way, our communities remain under the threat of a fundamental shift in the way that our budget priorities are negotiated — where now shutting down the government and services delivered across the country is on the table. It should never be — especially not as a way to strong-arm racist and unpopular policy.

NC Budget and Tax Center

Few workers have enough savings to withstand a long-term government shutdown

The shutdown of the federal government is having a detrimental impact on employees who are either furloughed or who are working without pay. Last Friday marked the first full pay period some employees went without a paycheck, and while their pay may be on hold, their bills certainly are not.

Workers are still expected to pay rent, families are still expected to pay for childcare, and recent graduates are still expected to pay their student loans.

Unfortunately, far too few Americans actually have enough savings to go for weeks, let along an entire month, without pay. When the Federal Reserve’s Survey on Consumer Finances asked families how they would deal with a hypothetical income shortfall, 58 percent of families said they would draw from savings and investments, while only 21 percent responded that they would need to borrow money. But when families who actually faced income shortfalls reported how they made ends meet, only 44 percent were able to pull from savings while 43 percent of families had to borrow money, including taking on credit card debt.

The reality is that nearly 30 percent of all of households, regardless of income, have less than $1,000 in savings. Most Americans are ill prepared to handle a financial emergency such as an illness, job loss, or, in this case, a government shutdown.

According to The Center for Enterprise and Development, more than 25 percent of North Carolinians are asset poor, and more than half (51.5 percent) of all North Carolinians are “liquid asset poor,” meaning they do not have enough cash savings for a safety net in case of a family emergency.

Middle-income, not just low-wage workers, are at risk of running through their savings and going into debt to weather the shutdown. The Survey on Consumer Science finds that the typical worker who earns between $45,000 and $70,000 each year has $2,200 in savings. While this may be enough to pay for a car repair or an unexpected home expense, it is not nearly enough to cover everyday expenses. According to the Living Income Standard, a family with just one adult and one child incurs at least $3,000 in expenses each month. Families with multiple children who live in high-costs counties or who earn lower wages face even larger challenges.

Workers who earn between $25,000 and $45,000 a year typically have $1,500 in savings, and most families who earn even less have $500 or less in case of emergency.

Even in households with middle class income, the government shutdown is having a disproportionate effect on households of color.

The Survey of Consumer Finance demonstrated that even within income brackets, there are still disparities in which families have access to an adequate amount of savings. When households were asked if they could borrow $3,000 from friends or family in case of emergency, only 43 and 49 percent of Black and Hispanic households answered “yes” while 71 percent of white households reported they could.

This points to the long-term effects of occupational and educational segregation, wealth inequality, discrimination in the workplace and financial institutions, and other factors. Although Black and Brown families may have similar incomes to their white counterparts, they often pay more for access to capital through loans, are less likely to receive intergenerational wealth transfers to avoid costs such as mortgage insurance, and are more likely to provide ongoing financial support to family members who earn less.

While there are many factors that result in different liquid asset rates for families along lines of race and ethnicity, the end result is that the combination of the government shutdown and a lack of income can easily push families into long-term debt situations — and even out of the middle class altogether.

Ending the shutdown is the only way to ensure that these workers and their families do not suffer from a lifetime of financial burdens as a result of the President’s obsessive pursuit of a racist and xenophobic immigration policy.