State analysts say requiring Medicaid recipients to work won’t save money

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An analysis by state officials finds that requiring people who receive Medicaid to work won’t save the state money. That’s because the state would have to pay people to help residents to find work, and to check that they’re complying with a requirement.

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President Donald Trump’s administration is encouraging states to require people to work if they benefit from Medicaid or other low-income programs.

Senate Bill 193 seeks to do this by requiring Medicaid recipients to seek work or job training, volunteer, engage in subsistence activities or provide caregiving. The requirements would apply to adult Medicaid recipients who are younger than 65, who do not have disabilities and who aren’t being treated for substance abuse.

The state Department of Health and Social Services said the state would need to hire workers to ensure the state meets federal requirements.

Deputy Health and Social Services Commissioner Jon Sherwood said federal officials set a high bar for states to meet, in part because the work requirements will face legal challenges.

Division of Public Assistance Director Monica Windom and Department of Health and Social Services Deputy Commissioner Jon Sherwood present information about Medicaid to the Senate Finance Committee on Tuesday. The committee discussed Senate Bill 193, which would require Medicaid recipients to work, study, volunteer, engage in subsistence activities or provide caregiving. (Photo by Andrew Kitchenman/KTOO)

“Their policy was written with defending litigation around this issue in mind, so there are a lot of requirements imposed upon states who move forward, to ensure that the individuals subject to these requirements have adequate protection,” Sherwood said.

To do this, the department proposed hiring 49 people. The expense from the added positions, along with other costs to help people find work, means the department estimates the added requirement would cost nearly $14 million per year. Even if the state could cut most of the projected expenses from the bill, the costs would still exceed the savings, because most of the savings would go to the federal government, which funds the bulk of Medicaid costs for those affected.

Senators pressed Sherwood on why the department didn’t expect more savings for the state. He defended the approach.

“We do our best to come up with what we think are reasonable assumptions, and avoid making highly speculative guesses,” Sherwood said.

Sherwood noted that the constant monitoring of whether Medicaid recipients are complying with requirements would be more expensive than other social programs.

Republican Sens. Anna MacKinnon of Eagle River and Peter Micciche of Soldotna support eliminating the 49 proposed positions. They argue that private contractors or the Department of Labor and Workforce Development could do the work. But they want more information about how that would work.

Micciche said there must be a way to not add to department costs.

“The organization is a bureaucracy that does things a certain way – most of it’s born in D.C. and we inherit it,” Micciche said. “And that’s the problem – is that it does things a certain way, and that certain way isn’t working.”

Due to the various health and age exemptions, the bill would only affect 25,000 Alaskans: roughly one in 10 people who receive Medicaid.

The Senate Finance Committee discussed the measure Tuesday. The committee plans to bring the bill up again Wednesday.