Amanda Mills has insurance through Kentucky’s expanded Medicaid program. She also has a full-time job working with homeless people in Louisville.
In January, she’ll lose Medicaid coverage because she makes $1,000-a-year more than the threshold, which is about $28,000 per year. And, she says, she won’t be able to afford the insurance her employer offers, plunging her into a familiar gap created by the Affordable Care Act where people earn too much for Medicaid but too little for a subsidy to assist with premiums.
Mills is one of the many people in Kentucky who is considered working poor. She is also a sort of ideal as envisioned by Gov. Matt Bevin’s proposed changes to the expanded Medicaid program: She has a full-time job that offers health insurance, and she is moving off Medicaid.
Bevin is seeking to use expanded Medicaid as a sort of incentive to push recipients to work, even though many already do. The work requirement is not a new idea, but if it’s approved, it would mark a fundamental shift in the way Medicaid benefits are disbursed.
And it’s something, according to a new study, that could be very difficult.
A Hard Transition
Mills simply can’t afford her employer-based insurance, which would cost her about $200 a month. That’s a situation many Kentuckians could find themselves in if they’re pushed off Medicaid and onto employer coverage.
Still, the governor’s office believes doing so would help Medicaid recipients become more self-sufficient.
“Beneficiaries may only truly escape the bonds of generational poverty and improve their quality of life through obtaining stable employment,” Bevin’s proposed waiver states.
Kentucky’s new expanded Medicaid program would include a de facto work requirement for the first time in Medicaid’s 50-year history. Under the proposed plan, recipients would be required to spend 20 hours a week working, volunteering, searching for a job, participating in job training or attending school. Some people, like primary caregivers and those with disabilities, would be exempt.
Bevin’s administration filed the waiver with the federal government last August. A recent report from Inside Health Policy said the federal government has approved most of the Medicaid changes — all but the work requirement, which is still being negotiated.
The changes would force some Medicaid recipients off the program and onto employer insurance if it is offered. But in those cases, the state would provide premium assistance — although the amount and method of payment hasn’t been determined.
Without required work hours, the state would suspend Medicaid benefits. That suspension could be cut short if enrollees did certain things, like take a financial literacy course.
But according to research that appeared in Health Affairs on Wednesday, one-third of people with Medicaid coverage already are working. And if these people have an employer that offers insurance coverage, the Bevin administration’s stated goal of transitioning enrollees to employer-based insurance may be difficult.
“The option is there, but there’s no money,” Mills said. “I could pay that and then we could be homeless. Or I could pay that and then my kids wouldn’t eat.”
The 31-year-old Mills has a blood clot disorder that will require surgery in November. She’s considered cutting back on her hours at work to shrink her income and stay on Medicaid.
“I thought about it,” she said. “But what example would that set for my kids, my coworkers and the people I mentor?”
Mills also looked at buying a plan on Healthcare.gov and getting cost-sharing help. But people with the option of employer-based insurance don’t qualify for subsidies and can’t sign up under the Affordable Care Act.
‘Doing The Right Thing’
Jessica Greene, a professor of health policy at Baruch College in New York and author of the report, conducted focus groups with 79 low-income people in June. She said many of the people interviewed are in a similar position as Mills.
But they’re stuck in a place Bevin might not have anticipated.
“So there are all these people doing the right thing, and trying to get their lives in order, yet they’re facing this gulf and it’s an area that the ACA has left this huge gap,” Greene said.
Although Mills said she could use income from a second job outside of her daytime job, she hasn’t done it because that extra income would have kicked her off coverage. Greene’s interviews showed others had made similar choices: turning down overtime work, going from full-time to part-time and foregoing promotions to keep insurance.
“There was another person who had to say no to a promotion because she wouldn’t have been able to afford health coverage if she took the promotion,” Greene said.
Some focus group members proposed policy ideas that could help people who have Medicaid and have the choice of employer-based coverage:
- Under the proposal, enrollees would have to pay monthly premiums (or co-pays). Put the monthly premium into a health savings account for the enrollee to save and later use toward employer-based insurance premiums.
- Create a transitional program to help people going from Medicaid to employer-based insurance. That could include allowing enrollees to volunteer in exchange for a gradual phase-away of their Medicaid benefits.
- Have a gradual phase-out of Medicaid to employer-coverage with Medicaid covering a portion of the employer premium.
In July, the Bevin administration proposed a new round of changes to the waiver that they say would save the state more money. The state estimates they would reduce the Medicaid rolls by an additional 9,000 enrollees.