Last week, Senate Health and Social Services (HSS) Committee held its first hearing on Senate Bill 7, sponsored by Sen. Peter Micciche (R-Soldotna), proposing major changes to Alaska’s Medicaid System.

SB7 takes advantage of an executive order signed by President Donald Trump in April of last year, titled, “Reducing Poverty in America by Promoting Opportunity and Economic Mobility,” ordering states to review their welfare programs and to, as Tara Golshan succinctly phrased it for Vox, “enforce current work requirements, propose additional, stronger requirements, and find savings (in other words, make cuts), and to give states more flexibility to run welfare programs.”

“This bill is about opportunity,” Micciche told his Senate colleagues Friday afternoon. “This is taking the long view toward breaking a negative cycle, in my view. Senate Bill 7 answers one question, which is: should Alaskans who receive Medicaid benefits have the requirement to work? I say yes. And Senate Bill 7 is a direct path to achieving that end and realizing that opportunity.”

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Trump’s executive order opened states up to apply for a Section 1115 Medicaid waiver allowing them to depart from mandates in the Affordable Care Act.

The waivers “test the hypothesis that requiring work or community engagement as a condition of eligibility will result in more beneficiaries being employed or engaging in other productive activities,” Micciche’s staffer, Edra Morledge, explained during a sectional analysis of the bill. “The goal is that this will result in increased health and well being for the beneficiaries in our communities.”

There are roughly 210,000 Medicaid recipients in Alaska. The proposed work requirements in SB7 would affect an estimated 22,148 recipients, according to the Alaska Department of Health and Social Services (DHSS). The proposal would require those specific recipients to “submit proof of employment or proof of seeking employment, participation in an educational or training program, volunteering, engaging in subsistence programs, or caregiving.”

If a recipient does not fulfill these requirements after 90 days, they are found to be noncompliant and medical coverage is terminated. Once kicked off the Medicaid rolls, the affected Alaskan would not be able to reapply until the following year.

Numerous exemptions are provided. Those under the age of 18 or over the age of 65 are outside of the scope, as well as individuals unable to work for medical reasons. Parents or caretakers of a dependent up to 12 months of age, parents or caretakers of a child with a disability, caretakers of a relative with a disability, pregnant beneficiaries, and individuals receiving unemployment insurance or participating in a tribal work program are similarly exempt. Temporary exemptions are extended to residents experiencing a family hardship (a death in the family or a similar immediate crisis), victims of domestic violence, and individuals with drug or alcohol addiction undergoing substance abuse treatment.

“The reality of it is, we live in a state where less than half of us work, a third of us are on Medicaid essentially, and more than half of the children born in Alaska last year were born under Medicaid,” Micciche said. “I don’t say that as a way to be disparaging of folks that are in need of medical help. I’m just wanting to provide opportunities so that they don’t spend a lifetime counting on those kinds of services.”

Early Signs Point to Dim Outlooks for Work Requirements

Micciche noted that, with SB7, Alaska would “join 16 other states that are moving forward with similar Medicaid requirements.”

While technically true, the figure is misleading.

16 states have applied for a waiver to enact work requirements of varying scopes.

In several states, applications are pending – a process that can take a year or longer. Maine Governor Janet Mills pulled out of the waiver request. In Wisconsin and Michigan, recently elected Democratic governors have expressed the inclination to do the same. Arizona’s request has been granted by the federal government, but will not be implemented until next year. New Hampshire and Oklahoma have also received green lights, but have not yet begun implementation. Requests in other states are still pending.

Kentucky received a waiver and implementation was scheduled to begin in June of last year. That process was blocked by a federal judge, who sided with 16 Kentuckians who sued the State, fearing the work requirements would result in denial of coverage. In the ruling, U.S. District Court Judge James Boasberg wrote that the work requirements could “relegate [the plaintiffs] to second-class status within Medicaid, putting them and others ‘in danger of losing’ their health insurance altogether.”

The waiver was kicked back to the U.S. Centers for Medicare and Medicaid Services, which re-approved a slightly amended version last November. That version is again being challenged in court, blocking implementation.

Thus, the 16 states are whittled down to Arkansas, the lone state to fully implement an approved waiver for Medicaid work requirements: the first and, thus far, only actual test case.

“Unfortunately, it corroborates the most pessimistic projections,” Jennifer Wagner surmised, writing last year for the Center on Budget and Policy Priorities, a national nonpartisan research and policy institute.

Arkansas’s Medicaid rolls include about 250,000 recipients. About 65,000 fall under the work requirements, which began in June of last year.

“As of December 1, [2018,] nearly 17,000 Arkansas Medicaid beneficiaries have lost coverage due to the new requirements,” Wagner wrote. “This amounts to nearly 22 percent of all beneficiaries so far subject to the new policy, even higher than the 15 percent coverage loss Kentucky projected would result from its waiver by the fifth year and the 6 to 17 percent coverage loss that Kaiser Family Foundation researchers forecasted could result from implementing work requirements nationwide.”

“What’s maybe most striking in the numbers is how few people are reporting their activities to the state as required,” Dylan Scott observed for Vox the same month. “About 10,000 people were still required to report their work activities to the state. Only 1,428 actually satisfied the reporting requirement, continuing a trend from previous months; more than 8,300 people did not report any work activities at all.”

The surprisingly high noncompliance rate prompted the Medicaid and CHIP Payment and Access Commission (MACPAC), a nonpartisan federal advisory panel, to appeal to the U.S. DHHS Secretary, urging the federal agency to discontinue suspending any more beneficiaries from the rolls. “[W]e are highly concerned about the disenrollment (and subsequent lockout) of 8,462 individuals in Arkansas from Medicaid coverage because they did not report work and community engagement activities,” Penny Thompson, chair of MACPAC wrote. “The low level of reporting is a strong warning signal that the current process may be structured in a way that provides individuals an opportunity to success, with high stakes for beneficiaries who fail.”

Alaska Shouldn’t Expect Better Results Under SB7

The work requirement in Arkansas mandates affected Medicaid beneficiaries report their employment, job training, etc., via a web portal, despite the reality that more than 20 percent of the state’s beneficiaries lack internet access, according to The Urban Institute.

SB7 has no explicit directive in terms of how reporting occurs, but Alaska bears comparably dismal internet access statistics.

SB7 extends to all beneficiaries between the ages of 18 and 65 – the broadest range of any state. Most states cap the age at 49. Only New Hampshire comes close, cutting off at age 64 – but the plan has not been implemented yet.

“We’ve heard that most of the average age of the state workers are between the ages of 41 and 44 and that 65 might be a little high for a work requirement,” Sen. David Wilson (R-Wasilla) asked during the committee meeting.

Morledge responded that SB7 was modeled after previous legislation.

“Anything in this bill actually relate to helping folks find jobs?” Sen. Gary Stevens (R-Kodiak) asked. “Or are we dealing with other programs that would do that?”

James Harvey, assistant director with the Department of Labor and Workforce Development, Division of Employment and Training Services, said that there were online options as well as over a dozen offices statewide tasked with connecting employment seeking Alaskans with opportunities.

Of the affected 22,148 Medicaid recipients, “there is a number of individuals that are working. And of that group, there is a number of individuals who have demonstrated work through the fact that they’re receiving unemployment insurance benefits,” Harvey responded. “So, in addressing that as-yet-at-this-point-to-me-unknown number of individuals who have never worked, we do that on a daily basis. We have individuals that come in with little-to-know experience all the time and those, generally, are younger adult Alaskans. And we work well with them.”

Those resources would dwindle under the proposed budget unveiled last week by Gov. Michael J. Dunleavy (R-Alaska), which cut the overall budget of DHSS by 25 percent – including a 23.7 percent cut to Adult Services, a 50 percent reduction to General Relief Assistance, and a complete zeroing out of Tribal Assistance Services.

Wilson said that the committee should look for ways to consolidate services.

It should be noted that the bill upon which SB7, word for word, was based was Senate Bill 193, introduced last year. SB193 passed the Senate but died in the House. Wilson was a cosponsor and voted for it twice, both in committee and on the Senate floor.

Unintended Consequences are Unavoidable

“New Medicaid eligibility standards, unless they are very carefully crafted to avoid unintended consequences, could result in restricting needed access to health care for Alaskans who have jobs, disabilities, chronic illnesses, or other health care needs,” Jeannie Monk, senior vice president of the Alaska State Hospital Nurses and Nursing Home Association (ASHNHA), testified, noting that the several fiscal notes netted the state about $18 million.

“We’re really talking about a cost shift. Their health needs won’t go away. Their coverage will. Those health needs will be absorbed by somebody within our health system – probably in the most expensive place health care can be received, in the emergency room.”

Monk was the first to offer testimony, which was lopsidedly against the proposal.

Erin Walker-Tolles, the executive director for Catholic Community Services, previously served as chief of policy and program development for the State’s Division of Public Assistance, as well as the Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) director. She cautioned against expectations of beneficiaries self-reporting work requirements, as well as applying for exemptions.

“What we found when we were implementing work requirements for families on TANF is that there were simply no volunteer opportunities available in rural Alaska,” she testified.

SB7 would require a 20 hour minimum of work, job training, or volunteerism, in line with the requirements proposed in Mississippi, Ohio, Tennessee, Virginia, and Indiana. Other states yield to a roughly-equivalent monthly requirement of 80 hours, allowing more flexibility. Alabama is slightly lower, mandating 35 hours per week. New Hampshire offers the strictest requirement of 100 hours per month.

“The time it took to try and develop those positions, those opportunities, required a lot of effort and work and partnership to get even just one or two positions available, and still not adequate hours available to be shared among the people on temporary assistance in the village, much less looking at a much larger population, since most folks in the villages are accessing Medicaid.”

Rural Alaskans had difficulty meeting existing federal verification standards when trying to report work hours in cases of volunteerism, self employment, and subsistence activities, she said. It would be impossible to predict what could happen under the additional requirements of SB7, which are not defined in the legislation.

Many remote areas do not have health care centers, and the otherwise simple task of getting an exemption application signed by a physician was prohibitive to a point where many Alaskans were forced to lapse from enrollment. For the same reason, many disabilities go undiagnosed and are thus not translated into exemptions.

Walker-Tolles recommended that villages with an unemployment rate of 50 percent or higher should be exempted from the law.

The U.S. Unemployment rate is four percent. The states closest to implementation of an 1115 waiver enacting Medicaid work requirements are Indiana, with a 3.3 unemployment rate; New Hampshire, at two percent; Wisconsin, at three percent; Kentucky, at 4.2 percent; and Arkansas, at 3.8 percent.

Alaska’s unemployment rate stands currently at 7.1 percent.

“Some may view Senate Bill 7 as a philosophical bill. But, I think it should be the default position of Americans and Alaskans that those who can work should work,” Micciche said on Friday. “I see this as an opportunity. The way that I view it is, we don’t know if the next person to cure cancer – to be the very best in whatever field they choose – is not relying on the state to carry them through every day, missing that opportunity to be the very best they can be – not only for themselves, but as an example for their families and their communities.”

Public testimony offered on Friday exceeded the time constraints on the Senate HSS committee. The bill was held over until the next meeting, slated for Wednesday afternoon at 1:30.

This article brought to you by Bon Jovi’s “Bad Medicine

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