Medicaid Work Requirements Will Negatively Impact Hospital Finances

A recently released report from the Commonwealth Fund details the impact of Medicaid work requirements for hospitals in 13 of the 15 states that have either applied for, or had a Medicaid work requirement waiver approved. Not surprisingly, the impact was negative (though it varied by state, based on the population included and demographic factors). 

At the low end, Arkansas hospitals are projected to lose an average of approximately $1 million (10 percent of Medicaid revenue) per hospital while at the high end, Michigan hospitals are projected to lose $6.85 million (21.5 percent of Medicaid revenue) per hospital.

On a related note, the Hill is reporting analysis by the Center for Budget and Policy Priorities contradicts HHS Secretary Alex Azar’s claims that most of the 18,000 people who lost Medicaid coverage in Arkansas for failing to comply with work requirements have found jobs. “The Center on Budget and Policy Priorities analysis shows that only 1,981 people had matches in the state’s new hire database, indicating they found new work. That means there is no evidence that the more than 16,000 others who lost coverage found new work. Even that number may be too high, the center said. The state database doesn’t show if the new jobs are full- or part-time work, or if they’re seasonal or permanent. It also doesn’t show if the new employee was previously unemployed or just changed jobs. It also doesn’t indicate if the new job provides health insurance.”

Takeaway

The analysis from Commonwealth Fund clearly shows the negative impact of Medicaid work requirements on hospital finances. Only in states like Virginia where the work requirement was a pre-condition to pass expansion legislation would the waiver be beneficial to provider finances. Given the complexity of the program, it’s clear from the Center on Budget and Policy Priorities’ analysis that hospitals and health systems in states impacted by work requirements will need to work closely with their patients, who are subject to the work requirements, to make sure they are aware of the requirements and the need to submit appropriate documentation to the state demonstrating they either are meeting the work requirements or should be exempt from them. This will require close coordination between both financial counselors, social workers, and the hospitals’ case managers. It also shows the need to expand the population targeted for financial counseling from the uninsured to those who may be subject to a work Medicaid requirement, particularly if it’s likely they will need ongoing care.