States will decide who loses coverage under the new Medicaid rules
Governors and legislatures must now decide whether to enforce these rules with compassion or cruelty.
By Jared Bernstein and Hannah Katch
While Congress is stuck in a stalemate over the expiration of subsidies to help people pay for health insurance, another equally consequential decision point is upon us, though this one has stayed under the radar. The same budget bill that failed to extend the subsidies, H.R. 1, hands states a powerful and highly consequential opportunity to protect health care coverage for eligible people—or take it away .
Congress enacted deep cuts to Medicaid in H.R.1. Among many other harmful policies, most states are required to take coverage away from people who don’t meet a work requirement. Regardless of how states implement this policy, it will surely lead to coverage losses—the Congressional Budget Office estimated that more than 7 million people will lose their Medicaid coverage, not because they’re ineligible or don’t need the coverage, but because they get caught in the new red tape.
That means the next major battle over health care coverage won’t take place in Washington. It will happen in state capitals, where governors and legislatures must now decide whether to enforce these rules with compassion or cruelty.
States that want to cut coverage have an open invitation to do so. They can make the system as punitive and bureaucratic as possible—by extending “lookback” periods that require applicants to document months of work before they enroll in health care coverage, or by demanding constant reverification from those already covered. They can bury exemptions for parents, caregivers, and people with disabilities under layers of paperwork until they become meaningless.
Or states can minimize harm by adopting flexible verification systems, allowing people to self-attest to exemptions when data already confirm their eligibility, and automatically suspending work requirements during spikes in unemployment or natural disasters. They can design policies that recognize reality: People juggling multiple part-time jobs, caring for children, or dealing with chronic illness often can’t meet arbitrary reporting deadlines.
We already know what happens when states take the hardline route. In 2018, Arkansas became the first state to impose a Medicaid work requirement. Within months, more than 18,000 people—one in four of those subject to the policy—lost coverage.
The same story will repeat unless states choose differently. Denying coverage doesn’t eliminate illness—it just shifts the costs elsewhere. When people lose Medicaid, they don’t stop needing insulin or cancer treatment. They show up in emergency rooms, where hospitals absorb the costs and eventually pass them on to others.
Action by the Centers for Medicare and Medicaid Services (CMS) will have a meaningful effect on states’ choices. It can issue regulations that set a floor—limiting how burdensome states’ rules can be, requiring transparency through data reporting, and preventing the most punitive policies. But the human outcomes will hinge on how states use their new authority.
Governors and legislatures that adopt rigid systems, ignoring what we know about how work requirements have failed, should be honest about the consequences: more uninsured residents, more unpaid hospital bills that ultimately burden taxpayers, and more economic stress on low-income families.
States can’t hide behind Washington when headlines start to document coverage losses and the broad costs they engender. The fallout from states’ choices will belong to them, and those that make the wrong choices will bear the consequences when the coverage losses inevitably arrive.
Jared Bernstein was the chair of the Council of Economic Advisers in the Biden Administration. Hannah Katch is the founder and principal at Katch Strategies. She served in the Biden–Harris administration at the Centers for Medicare & Medicaid Services (CMS) and as a state Medicaid administrator.
I was on the original team in Oregon that convened focus groups with businesses, medical staff, and citizens back in the 1980s to create a stopgap between insured and uninsured folk. The result was the Oregon Health Plan. Now the state's official Medicaid program, it serves 25% of the state population. That number is huge and demonstrates the need--and consider those who are not on it, unable to do the paperwork, fall short of qualifying, etc.
Back then, I was a young college grad holding a secretarial job while I pursued my career. I was a fly on the wall during those meetings in which interested parties hashed out how to offer medical coverage to residents in need. The irony is that due to a poor income year, I was kicked off of Obamacare last year. I am now enrolled in the Oregon Health Plan. For the time being.
As these states begin to show their colors I hope the Contrarian develops and maintains a "cruelty/compassionate list. The list should easily display the degree of cruelty or compassion.