Red Tape Results in Thousands of Arkansans Losing Coverage

NOTE (January 17, 2019):  From August through December 2018, Arkansas disenrolled over 18,000 from Medicaid for failure to meet the work hours reporting requirement. Each individual disenrolled was locked out of Medicaid coverage from the point of disenrollment until January 2019, when they can reapply for coverage. At the point individuals re-enroll, the three month “clock” for reporting work hours begins again. Enrollees who fail to meet the reporting requirement will be subject to disenrollment for the remainder of the year.

Over 4,500 Medicaid enrollees in Arkansas stand to lose their health insurance for failing to visit a state website and report work hours by a September 5th deadline. This makes Arkansas the first state to cut people off Medicaid coverage for failing to file paperwork associated with a work requirement. It is also a spectacular demonstration of how disastrously paperwork requirements interact with health insurance enrollment—over 40 percent of those subject to the reporting requirement failed to report. Many others were either exempted or claimed an exemption. Only a small number of people appear to have actually entered work or “community service” hours into the state’s new and much-touted website. Jessica Greene reported almost total lack of awareness among affected Arkansas Medicaid beneficiaries that their coverage is at grave risk.

Those who are disenrolled will be locked-out of Medicaid until January 1, 2019. They will almost certainly have no other option for health insurance. For many, this will mean disruptions in care and medications, health care expenses that will push them further into poverty, or both. The state is offering the opportunity to file for a “good cause” exemption because of website glitches that affected individuals’ ability to report hours. However, there’s little reason to believe that people will know about this exemption, or be able to complete it, any more than was the case with the initial reporting requirement.

In June, Arkansas initiated its work reporting requirement for Medicaid expansion beneficiaries ages 30 to 49, with monthly cohorts based on who were coming up for renewal. This phased process means that fewer than 20% of the enrollees Medicaid enrollees aged 19-49 who will ultimately be subject to the work requirement have been affected in the first cohort, and that disenrollments will be in the tens of thousands at the least once the new requirements are fully phased in. Beneficiaries have to report work hours monthly online, unless their work is already documented in another program. Individuals who miss three reporting periods in a year lose coverage until the beginning of the next calendar year, regardless of whether or not they are working the requisite number of hours or qualify for a program exemption. September marks the end of the first three months of the program and the start of coverage terminations. As noted above, over 4,500 enrollees failed to file an online report, a harbinger of much larger disenrollments to come.

Red-tape and paperwork predictably lead to coverage losses

Since states began asking CMS for approval to add a work requirement to their Medicaid programs, people who work with Medicaid enrollees and understand the Medicaid program have said that the associated reporting requirements will make it hard for all enrollees to keep Medicaid, whether or not they meet the requisite number of work hours or qualify for an exemption from the work requirement. Today, Arkansas is a case study proving that point.

Timeline of failed outreach

The following statistics, excluding the final bullet, are from June and July 2018 Arkansas Health Services Department reports:

• In May, Arkansas notified just over 27,000 Medicaid enrollees that they were subject to the work requirement.
• By the end of June, 1,325 of those cases were closed for reasons not related to work reporting (i.e., individuals had move or lost Medicaid coverage) leaving 25,815 subject to the requirement.
• Using available state data, Arkansas identified 15,511 individuals who either met the work requirement or were exempt and sent them notices that they did not need to report their activities. That left 10,304 who needed to report on the state’s website.
• At the end of June, over 7,000 individuals still needed had not met the reporting requirement.
• At the end of July, 5,500 individuals had not met the reporting requirement and fewer than 300 people had actually entered in hours on the state’s website.
• At the end of the three months, 4,574 individuals—44 percent of those required to report on their own—had not met the reporting requirement and were subject to disenrollment.

There is no scenario under which these numbers point to success in either outreach or in helping people find jobs.

Flawed design at the outset

To save money, Arkansas opted to have a fully automated system, where enrollees would have to register and report work hours or eligibility for exemptions online. The system is only available from 7am to 9pm, omitting times when it is taken down for upgrades. At the outset, people familiar with Arkansas’s IT system said that this didn’t bode well, particularly given that the portal was built upon the existing Access Arkansas website, which has a history of problems.

Arkansas Department of Health Services Director Cindy Gillespie framed this online only decision as a way to help people get ahead. In the Arkansas Times, she was quoted as saying: “Having that little bit of computer or phone literacy is important if you are going to be able to be moving up the income ladder,” although she also noted that it would cost more money to run the program any other way.

Decades of evidence show that any new documentation as a condition of eligibility will sharply reduce enrollment levels in health insurance. But the state’s decision to have an online only system shows a shocking and perhaps willful lack of understand of the population they are trying to reach. It is a population with limited internet access, and many living in deep poverty.

A comprehensive demographic analysis of the Arkansas population subject to work requirements found that nearly a quarter (23%) had no home internet and over half (52%) had no broadband (DSL, cable, fiber optic) access.  Given that over a quarter (26%) are estimated to have incomes below 50 percent of the poverty level (less than $8,230/year for a family of two) it is simply not reasonable to expect that they will go out and purchase computers, pay monthly access fees, and upgrade to systems that would make it faster and easier for them to do online reporting. Anecdotal evidence from interviews and focus groups with enrollees show that many were not aware of the reporting requirement.

Outcomes inconsistent with the program’s goals

Arkansas governor Asa Hutchinson has said that the decision to add a work requirement in Medicaid is “….about giving people an opportunity to work. It’s to give them the training that they need. It’s to help them move out of poverty and up the economic ladder.” However, results show that mostly what it is doing is moving thousands off the Medicaid rolls and into the ranks of the uninsured.

Many who end up being cut off health coverage may actually meet the state’s work requirement or, more likely, be eligible for an exemption. An Urban Institute study estimates that over 85 percent of those subject to the work requirement in 2018 will qualify for an exemption. Their failure was not filling out all the red-tape in a system seemingly designed to make it hard for them to comply.

Cutting thousands off Medicaid will not help move them out of poverty and up the economic ladder. In fact, quite the opposite will be true. Medicaid coverage has been shown to help improve enrollee’s financial security by doing what insurance is supposed to do: shielding them from medical debt when they access needed health care. Cutting people off Medicaid because they don’t report work hours will set them back financially, cut off their access to health care, and lead to worse health outcomes.

A structure inconsistent with Medicaid’s purpose

Ultimately, Arkansas’s new requirements are inconsistent with Medicaid’s objectives. Medicaid’s objective, defined in Medicaid law and recently affirmed in federal court in the Stewart v. Azar case, is to furnish medical care to people who would otherwise not be able to afford that care. There is nothing about a work requirement that supports that purpose. But there is everything about a program that cuts people off coverage when they don’t report work hours that will make it harder for people to get ahead.