Special Report: Starting in Arkansas, Trump-era Medicaid rules alter healthcare landscape

[July 10, 2018]  By Yasmeen Abutaleb

EARLE, Arkansas (Reuters) - Gregory Tyrone Bryant left his last stable job at a meatpacking factory to fight a cocaine addiction eight years ago. When he returned to the workforce a year later, his options were limited: mostly temporary jobs without healthcare benefits.

Since 2014, he’s relied on medical coverage offered under Arkansas’ expanded Medicaid program for low-income households. It proved essential last June when he needed surgery to replace his right knee, and covers costly prescriptions for acid reflux and high blood pressure medicines.

Bryant, 48, had been out of work again for more than a year until late last month, when he got hired as a janitor in his local school district. On a 90-day probation period, he hopes the job will turn into full-time work. He had been living off a monthly short-term disability check from his last job assembling rear axles for Toyota cars. There’s not much on offer near his home in Earle, Arkansas, population 2,000.

If his job doesn’t pan out, his unemployment will pose a new threat to his healthcare coverage.

In June, Arkansas became the first U.S. state to require that many able-bodied Medicaid recipients do some combination of work, volunteer, job training or schooling a minimum of 80 hours each month to keep their benefits, a sweeping shift in healthcare rules that will soon be followed by Indiana and New Hampshire. Another eight states await approval from the Trump administration for similar work requirements that will fundamentally refigure the 50-year-old program.

Republican governors and lawmakers say the work requirements are vital to help manage their ballooning Medicaid costs, particularly in states like Arkansas that expanded the program under former President Barack Obama’s Affordable Care Act. The goal, they say, is to encourage healthier residents to return to the employment track, or seek better jobs that could eventually bring benefits.

“It’s an element of individual responsibility that if you’re able-bodied … you should be contributing in some fashion,” Arkansas Governor Asa Hutchinson said in an interview. “You always want people to move up to make more wages and have a higher income so they don’t even have to qualify for Medicaid.”

Yet the new measures have triggered fears that thousands could lose their Medicaid benefits, putting already vulnerable laborers deeper into the hole. The changes are also forcing insurers to hustle to help clients navigate the maze of paperwork they must complete to keep benefits intact.

And Kentucky’s plan, poised to become the second to take effect, hit an abrupt halt last month when a federal judge blocked the law – deeming the Trump administration’s approval “arbitrary and capricious.” The U.S. Department of Health and Human Services never fully considered whether Kentucky’s plan will provide medical assistance to residents, U.S. District Judge James Boasberg ruled. The state said it will amend its proposal in hopes of clearing the legal hurdle.

In Kentucky alone, nearly 100,000 more people could be eliminated from Medicaid within five years than without the new measures, state estimates say. Kentuckians who do not work 80 hours in any one month or fail to pay new premiums will be locked out for six months; beneficiaries could take a health or financial literacy course to reactivate coverage.

In Arkansas, those who fail to meet the work requirements for any three months will be locked out of health insurance for the remainder of the year.

In meetings with state legislators, the Arkansas Hospital Association has expressed concern that many affected by the rules will either not be able to find work, or won’t be able to meet online filing requirements because they live in rural areas without reliable Internet access.

“We’re worried about people losing coverage who should not be losing their coverage,” said Bo Ryall, the group’s president.

As he visited a local health clinic for severe back pain, Bryant pondered that question. “I thought the insurance was to help us, even if you’re working, even if you’re not working,” he said. “It was supposed to help us, not pull us down.”

MEDICAID GIVE AND TAKE

The Republican-controlled Congress tried several times last year to repeal Obamacare, formally known as the Affordable Care Act, and replace it with new legislation that would have overhauled Medicaid by giving states block grants to run their own Medicaid programs in lieu of the existing federal-state partnership. Their proposals would have cut federal spending on the government’s health insurance program for the poor and disabled by nearly $800 billion over 10 years.

When those efforts failed, the Trump administration put a conservative stamp on health policy, including approving state requests to implement work requirements.

Most states that have submitted proposals will require adult beneficiaries who are not disabled, pregnant or elderly to engage in some combination of work, volunteer, job training or school opportunities for at least 80 hours a month – or lose their benefits.

Such requirements create new hurdles to healthcare businesses in states that adopt them. Those businesses, including health insurers, hospitals and community clinics, say they’re moving to minimize the number of people who could lose their insurance.

WellCare <WCG.N>, one of Kentucky’s five Medicaid providers, said it will help connect members with job opportunities and training courses. It will staff a call center for beneficiaries to navigate requirements and services such as child care or access to food. The insurer has been meeting for more than a year with state officials gearing up for the program rollout, said Bill Jones, WellCare’s state president in Kentucky.

The company, which administers Medicaid plans in 12 states, has grown its business considerably since the Medicaid expansion took effect in 2014. Its stock price has more than tripled in that time.

“There’s always a concern there’s going to be business impact. I just want to make sure we’re not losing the wrong members,” Jones said, referring to beneficiaries who meet the requirements but don’t properly log their hours.

The insurer could lose members who transition to employer-provided coverage, Jones added, calling that the “right reason.”

Hospital and insurer lobbyists have begun pushing state government and health officials to allow for flexibility in exemptions from work, such as for those who live in areas with high unemployment, and to allow for a grace period before someone is locked out. They also want states to weigh worries that Medicaid members may not have transportation to work.

Arkansas Blue Cross and Blue Shield has staffers in its stores to help residents log their hours. The insurer will contact members not complying with work requirements – by, among other steps, tracking whether patients have picked up a pharmacy prescription. The pharmacist would then ensure customers understand the new rules. Arkansas Blue Cross and Blue Shield said it was working with Walmart <WMT.N>, Walgreens <WBA.O>, CVS <CVS.N>, local pharmacies and others.

In Arkansas, the work requirements apply to the Medicaid expansion population, which totals about 300,000 people. But many will be exempt from the new rules thanks to exceptions, including for illness, disability, pregnancy or their role as a caregiver.

Still, state officials estimate that up to 30,000-40,000 people in the first phase will have to find work to maintain their benefits, in which able-bodied adults 30-49 who earn less than $680 a month must submit documents each month showing they have worked or volunteered. In 2019, the program extends to adults 19-29.

Ennis Barnes, 40, fears he won’t make the cut. The new rules coincide with similar requirements for Arkansas food stamp recipients, and Barnes has already received notice his food benefits will be reduced.

Gregory Tyrone Bryant is pictured outside his home in Earle, Arkansas, U.S., May 3, 2018. Picture taken May 3, 2018. To match Special Report REUTERS/Mike Wood

Barnes lives in rural Lepanto, Arkansas. For several years, he’s worked with temp agencies to connect with manufacturing jobs. He worries companies won’t hire him permanently because of a drug charge dating back more than a decade. He works as a barber in his house a couple days a week – work that will not count toward his required hours since he doesn’t get a pay stub.

“I’ve got a family to take care of, grandbabies and everything,” Barnes said. “I just don’t understand.”

Kentucky planned to introduce its “community engagement” requirements this month for able-bodied adults 19-64 who are not pregnant, medically frail, a single parent, chronically homeless, in substance abuse treatment, enrolled in food stamps or a full-time student. The state is phasing in beneficiaries by region. The requirements also impose premium payments based on income; some who fail to make the payment will have to take a financial literacy course.

That plan hit a roadblock in federal court.

Sixteen Medicaid recipients in Kentucky won a federal lawsuit asking a judge to overturn the state’s work requirements, contending the federal HHS went beyond its authority by approving Kentucky’s waiver. The lawsuit said the plaintiffs are at risk of losing health benefits because of new eligibility criteria, the highest-ever premiums allowed in Medicaid and lockouts for those not meeting the requirements.

Kentucky said the judge blocked the program on the “narrow basis” that HHS had not considered the plan’s impact on Medicaid coverage, and said it would work with the agency to address the issue.

Days after the ruling, Kentucky Governor Matt Bevin cut dental and vision benefits for some 460,000 state Medicaid recipients, saying the benefits were dependent on implementation of the community engagement requirements. Without the new rules, “immediate benefit reductions would be required to compensate for the increasing costs of expanded Medicaid,” said Doug Hogan, spokesman for the state’s Cabinet for Health and Family Services.

Some legal experts say the ruling could thwart the Trump administration’s Medicaid blueprint, should residents in other states bring similar lawsuits.

“It points to the failure of the administration to provide a legitimate record to justify the approval,” said Allison Hoffman, a professor at the University of Pennsylvania Law School. “It’s unlikely that they’re going to come up with the kind of evidence they need to show that the requirements here actually make poor people healthier.”

BIG EMPLOYERS, PART-TIME WORKERS

Major corporations with large numbers of part-time workers, such as Walmart, headquartered in Bentonville, Arkansas, are one focal point of concern.

The world’s largest retailer has shifted to more part-time workers over the last decade, according to a May report from the Organization United for Respect, formerly called OUR Walmart. The labor group says it is a network of more than 150,000 people working in low-wage retail jobs.

An estimated 50 percent of Walmart’s U.S. workforce in 2018 is part-time, compared to 20 percent in 2005, the report said.

Daniel Schlademan, OUR’s co-director of organization, said that means more Walmart workers rely on state Medicaid programs for their healthcare, but did not provide figures. “All this is going to do is make more people have less coverage,” he said.

Walmart said its health plan covers more than one million people in the U.S., including spouses and dependents, and has seen the number of associates eligible for health coverage grow as its full-time workforce expanded. Its part-time employees are eligible for medical benefits if they average 30 hours per week over a 12-month period, the company said.

Walmart did not say how many of its employees receive health benefits, and it declined to provide a breakdown of part-time and full-time workers. The company disputed the OUR report, saying it converts about 150,000 employees a year from part- to full-time.

“We are proud to be one of the few retailers with a majority full-time hourly workforce,” said Walmart spokesman Justin Rushing. “We have more full-time jobs than any private business in America and we have seen that percentage go up over the last few years.”

Part-time and temporary workers could be particularly vulnerable with the new changes: Part-timers comprised nearly 16 percent of Arkansas’ workforce in 2017, or 208,000 people, federal data show.

Walmart and poultry producer Tyson Foods <TSN.N>, another large Arkansas employer, declined to discuss how the Medicaid measures would affect their workforces. Other large state employers, including propane supplier Ferrellgas <FGP.N>, chicken producer OK Foods, Cooper Tire & Rubber Co <CTB.N> and department store chain Dillards, declined comment.

Supporters of the new law say it will push more residents to find full-time work. Arkansas, for one, is short on registered nurses, certified nurse assistants, technical health field workers, truck drivers, construction workers and manufacturing laborers, said Arkansas Chamber of Commerce President Randy Zook.

“It’s going to persuade some people to take another look and likely they’ll find better opportunities than they thought were available,” Zook said.

Some Arkansans noted, though, that the new rules could be a challenge for people in rural pockets where full-time job openings have historically been thin.

Tina Lotts, 46, is one case study. She works 40 hours a week as a security guard at a consumer goods and technology warehouse. Yet Lotts is not considered a full-time employee and doesn’t qualify for healthcare coverage from her employer. A diabetic, Lotts relies on Medicaid for her doctor visits and the four medications needed to control her blood sugar levels and hypertension.

“I have 11 bills and it’s hard to pay them all,” Lotts said.

Since he lost his short-term disability payments, Bryant is applying for long-term disability in the hope of receiving an exemption from Arkansas’ requirements so that he is not at risk of losing his insurance. His wife, Felicia, has already applied for long-term disability due to vertigo, sciatic nerve pain and other issues.

Ideally, Bryant said, his new job will turn into full-time work and he won’t need an exemption. “I’m trying to find work every day.”

Indeed, labor advocates challenge the notion that able-bodied Americans haven’t pushed to find jobs, an underlying tenet of the new rules. The number of Americans actively engaged in the labor force who are looking, but haven’t found jobs, has declined to an 18-year low of 3.8 percent, and is considered near or at full employment.

“These are people who want to work full-time but can’t get full-time work,” said William Spriggs, chief economist of the AFL-CIO union. To Spriggs, the work requirements are “extremely naïve to assume that simply looking for a job gets someone a job” – or, at worst, “mean-spirited.”

Hutchinson, governor of the new law’s first test case, disagrees.

“It’s not punitive,” he said. “It’s simply that we respect work and we know the people of Arkansas want to work.”

(Additional reporting by Brendan Pierson. Editing by Michele Gershberg and Ronnie Greene.)

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