Earlier this month, Gov. Fallin signed HB 2932, directing the state to apply for federal permission to be allowed to remove low-income parents from health care coverage for failing to work enough hours in a given week. This comes on the heels of an executive order the Governor signed in March directing the state Medicaid agency, the Oklahoma Health Care Authority, to explore such a waiver.
We’ve warned before of the pitfalls of implementing a work requirement for SoonerCare coverage. However, with Oklahoma now committed to developing such a proposal, it is vitally important that policymakers proceed with caution. A work requirement in Oklahoma will affect tens of thousands of struggling parents, as well as their children and families. Furthermore, no other state has yet implemented such a requirement, and the Medicaid programs of states whose plans have been approved differ significantly from Oklahoma’s. Oklahoma administrators will need to tread very carefully to ensure that Oklahoma does not create more barriers to health and employment in implementing their work requirement.
Oklahoma’s proposed Medicaid work requirement is aimed directly at low-income families
Governor Fallin’s statement, released after she signed HB 2932, said in part that it would affect “able-bodied adults without dependents.” However, in Oklahoma’s Medicaid program, adults with dependents – that is, parents and caretakers raising children – are the only people a proposed work requirement could possibly apply to.
Governor Fallin’s signing statement also suggested that only about 8,000 Oklahomans on SoonerCare would be affected if the proposed work requirement goes into effect. According to the Health Care Authority, about 8,000 Oklahoma Medicaid members qualifying for coverage as a parent or caretaker don’t meet one of the few exemptions in the Governor’s Executive order (for instance, members who are pregnant or parenting children younger than 6) and report zero income – which is to say, individuals who aren’t working at all. But saying that only that number of people will be affected by the Governor’s proposal ignores what a work requirement would actually do.
All states whose work requirements plans have been approved by the federal government, and most of those with pending applications, seek to require 80 hours per month of work or an equivalent activity. There is a substantial gulf between zero income and 20 hours per week of income – and with the exception of individuals who can be automatically exempted, all 73,000 parents on SoonerCare will need to either report their hours to the Health Care Authority or seek and be granted an exemption.
Any situation where the price of failing to comply is loss of health coverage is high-stakes, but for parents, the consequences of failure are even more serious. A parent who can’t fill a prescription because they aren’t working enough will likely find herself less able to find work and parent effectively. For kids, having a caretaker who is not healthy enough to parent them or who has untreated mental illness is one of the most serious adverse childhood experiences, which can cause serious harm to a child’s health and well-being over their whole lifetime. Oklahomans already report these childhood traumas at higher rates than most other states.
People without health coverage are more likely to delay treatment for medical issues, further risking their health and threatening to overwhelm their family in medical debt. Furthermore, when parents lose health coverage, their children are more likely to become uninsured. In short, tying basic health coverage to work isn’t a threat just to parents’ health, but to the health and finances of entire families.
For these reasons, Oklahoma must do all that we can to ensure that SoonerCare members are able to meet and report their working hours reasonably. People with disabilities and chronic diseases must be able to continue their medical care. Similarly, exemptions must be broad enough to accommodate the realities of everyday life – from individuals unable to work because they’re caring for aging parents to those who simply don’t live in where the jobs are, or don’t have transportation to where the jobs are – and such exemptions must be obtainable to those who need them. People with mental illness or substance use disorders who are unable to adhere to treatment need to be able to keep their coverage, as do people unable to obtain safe or affordable child care, or safe and reliable transportation. In short, any work requirement must be responsive to the realities of poverty, recognizing that access to health care helps people find and keep jobs – and that losing the ability to see a doctor or fill a prescription only makes people less employable.
Implementing a Medicaid work requirement will be expensive
Oklahoma has one of the best online Medicaid enrollment programs in the country, with real-time eligibility verification and very low error rates. However, while that system tracks earnings, it can’t automatically track or verify hours of work, which is how compliance with a work requirement will likely be measured. There’s also currently no way for SoonerCare members to log on and upload work hours and accompanying documentation. Based on the experience of other states, it is clear that retooling Oklahoma’s eligibility system in order to do this will be expensive. In Kentucky, for instance, the estimated total price tag for just the first six months of the program is nearly $187 million.
The new costs don’t stop there. Oklahoma presumably plans to direct nonworking enrollees to job training programs or other similar options as a way to meet their required hours and hopefully gain employment. It’s not clear, however, what those programs will be, or which agency will be responsible for directing SoonerCare members into them.
Oklahoma currently operates an education and training program for SNAP – but it’s voluntary and currently only available in one county. Federal SNAP regulations, which Oklahoma’s work requirements reference, explicitly exempt anyone “medically certified as physically or mentally unfit for determinations,” and federal administrators have said that state work requirements must accommodate people with disabilities. These are processes that can’t be automated, and will require training – and likely adding – more case workers. In addition, some sort of accommodations will have to be made for people without reliable internet access. All of this comes with a cost to the state.
In Minnesota, that state’s management and budget office put the net cost to the state of a work requirement passed into law in 2018 at $121 million by 2020 and $163 million in 2021, with the greatest cost drivers being compliance monitoring and employment services. While Minnesota has a larger Medicaid population than Oklahoma, their estimates highlight how complex and expensive administering a work requirement will likely be in Oklahoma.
Without expanding coverage, a Medicaid work requirement could be a cruel Catch-22 for low-income parents
In Oklahoma, the income eligibility cutoff for working-age adults on SoonerCare without disabilities is 46 percent of the federal poverty level. That’s what sociologists refer to as “deep poverty,” and works out to less than $800 per month in income for a single mother with two children.
If members don’t comply with the work requirement, they’ll lose their coverage. But if they do comply, they could still lose coverage. because their incomes could easily exceed Oklahoma’s income eligibility cutoff.
If that mother works more hours or gets a raise that boosts her earnings to $850 per month, she’ll still fall well below the federal poverty level, but she will no longer have health coverage. She will have fallen into the coverage gap between where SoonerCare eligibility for parents ends (46 percent of the federal poverty level), and eligibility for subsidies on Healthcare.gov begins (100 percent of the federal poverty level, or $1,732 per month for that mother with two children).
If she lived in one of the 32 states that have accepted federal funds to expand coverage up to where Healthcare.gov’s subsidies begin, whether through Medicaid or by using federal dollars to subsidize private coverage, her situation would be different. But because Oklahoma has so far refused to expand coverage, a work requirement stands to create a Catch-22: If members don’t comply with the work requirement, they’ll lose their coverage. But if they do comply, they could still lose coverage. because their incomes could easily exceed Oklahoma’s income eligibility cutoff.
The federal government is aware of this issue: the federal administrator who leads the regulatory agency overseeing Medicaid has suggested that non-expansion states will need to structure their work requirement to ensure that those who lose their Medicaid eligibility as a result of a work requirement have other options. Oklahoma could easily fix the dilemma by simply expanding coverage, thereby eliminating the work requirement’s cliff and finally providing a path to basic health care for thousands of uninsured Oklahomans. Another option, and one that could be paired with coverage expansion, is to follow in Montana’s highly successful footsteps by creating a voluntary workforce promotion program that helps Montana’s Medicaid members overcome their barriers to employment.
The bottom line
Tying Medicaid coverage to employment is entirely new territory, with enormous potential for harm. Unfortunately, Oklahoma Medicaid administrators are also operating in a very tight timeline. Governor Fallin’s Executive Order directs the Health Care Authority to be prepared to submit their plan to the federal government by early fall, which likely means that a waiver draft will be available for public comment by July. At that time, Oklahoma advocates must be prepared to carefully scrutinize the state’s work requirement proposal and speak out if it does not account for these potential harms to Oklahoma families.