Done right, Medicaid work rules will save much

Although Louisiana imposing work-related requirements for able-bodied adults to receive Medicaid won’t save a lot of money, neither would it have trivial positive pecuniary benefits.

With the state kicking around ideas on how to accomplish this, the devil is in the details. Since federal law doesn’t let the federal government place such a stricture, states must come up with their own regulations consistent with the law’s demand that these improve the health and well-being of participants.

Thus, whatever states come up with, they must show that work conveys physical or mental health benefits, which likely would manifest only among those healthy enough to work and who do not have to care for an infant or one in the offing, and that potential loss of Medicaid because of inability to meet the requirement does not cause the reverse of the law’s imperative.

The latter scenario has data to back this up, such as the results of the Oregon Health Insurance Experiment, which demonstrated that Medicaid recipients registered worse health outcomes than a similar population of the uninsured. It’s the former point that is less certain, simply because there’s been no opportunity to evaluated the impact of work requirements for Medicaid, spawning largely theoretical conclusions about it to date.

Therefore, Louisiana must have a rigorous methodology to test for differences between those working that retain Medicaid and those that don’t work or perform a substitute activity like studying or volunteering who lose it. If negative repercussions appear, regarding the latter group it will have to change things up, if not scrap the idea.

Aside from that, this kind of requirement also conveys a potentially large spillover benefit. Eligibility fraud remains a persistent problem with Medicaid, with the total number of ineligible recipients unknown but predictable through some frightening anecdotal evidence: Oregon, known for its deep penetration of welfare provision in the population, reported in recent years from 28 to 45 percent of its enrolled Medicaid recipients didn’t qualify for the program.

Louisiana has an additional avenue for fraudulent Medicaid benefits receipt: when it expanded Medicaid, it allowed streamlined acceptance of Supplemental Nutritional Assistance Program recipients. But as an estimated 3 percent of SNAP beneficiaries enrolled illegally, that only imported such individuals likely also ineligible for Medicaid.

Yet having to verify work-related requirements presents an opportunity to check eligibility for the program as a whole. If nothing else, even if only an estimated 10 percent of current recipients would have to meet work-like requirements and, subtracting out administrative costs, imposing such requirements would not yield much savings, the state could see an enormous return on investment if these data reveal for removal ineligible individuals receiving benefits.

The state also must take care to prevent exempting from the requirement people who don’t deserve the benefit. For example, in determining whether a recipient or an adult dependent claim a disability, it should use the same standards and process as employed for the determination of Social Security Disability Insurance payments – themselves relaxed by the Pres. Barack Obama Administration, which applied a similar strategy to a number of government benefits programs over the last few years that resulted in a massive expansion of people receiving these. Better, Louisiana should use the standards in place prior to Obama’s loosening of these.

A coordinated effort considering factors beyond working, with an eye on strengthening eligibility determination not just on the basis of work, will reap Louisiana huge benefits, not the least in keeping a program swallowing nearly half the state’s budget from crowding out resources to spend on other important priorities.