Earlier this month, the head of the Centers for Medicare and Medicaid Services (CMS), Seema Verma, made an announcement conveying that CMS would approve waiver applications from states that would require Medicaid enrollees to participate in “community engagement” activities, otherwise known as work requirements. This follows a letter co-authored by Verma that encouraged state Medicaid directors to use these waivers to modify their Medicaid programs to empower consumers. To advocates, work requirements are a way to empower Medicaid enrollees by encouraging them to be independent, self-sufficient consumers of healthcare.

Here’s what you should know about the proposed work requirements for Medicaid:

1115 waivers

States can apply to CMS to implement work requirements with a section 1115 waiver. These waivers allow states to experiment with new, innovative approaches to Medicaid. While each state would implement their own work requirements, the common principle is that Medicaid enrollees must work a certain number of hours per week over a certain period of time, or else they will be disenrolled. The exceptions are for individuals who are students, caretakers, or sick.

Seema Verma’s support

Before her appointment as CMS Administrator, Seema Verma implemented other types of personal responsibilities for Medicaid enrollees as a consultant on the Healthy Indiana Plan (HIP) 1.0 and 2.0. She believes this type of engagement turns enrollees into “active consumers” of healthcare. It is important to note that Verma has publicly referred to work requirements as “community engagement” activities, though they are the same thing for all intents and purposes.

Reduced Medicaid spending?

Supporters of work requirements believe that this would enable a large number of Medicaid enrollees to move off of the program and onto employer-sponsored coverage or private insurance. Verma and many others believe that Medicaid Expansion, enabled by the Patient Protection and Affordable Care Act (ACA), jeopardizes care for the population that Medicaid was traditionally intended for by diverting limited resources away from them to care for the new enrollees.

[See also: 1115 Waivers Signal a Bright Future for Medicaid]

Current Medicaid employment

An analysis of data from the Kaiser Family Foundation (KFF) found that 59% of current Medicaid enrollees work either part or full-time, and that 37% of Medicaid enrollees are currently not working because they are students, caretakers, or sickly. This leaves 4% of Medicaid enrollees not working without a legitimate reason.

Predictions from a similar program

Studies on Temporary Assistance for Needy Families (TANF), a federal-assistance program like Medicaid, have revealed a slight increase in the percentage of employed enrollees two years after it implemented work requirements, but all increases were lost by the fifth year. Some experts believe that this would also be the case if work requirements were implemented for Medicaid. When TANF implemented work requirements, most of its enrollees who could work were already working, which is also the case for Medicaid today.

[See also: Will the ACA Evolve into Consumerized Medicaid?]

There are eight states that have applied for section 1115 waivers work requirements. Despite Verma signaling CMS’s support, none of the eight have received approval. Experts believe that this is likely because the ACA established standards for 1115 waivers that applications with work requirements would fail to meet. This gives weight to the legal challenges that are sure to emerge if CMS does approve any of these pending applications while the ACA is still in place.

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Sean Kirschner

Sean is a Business Analyst at Softheon. His objective is to provide insight into the current state of the healthcare landscape through research on both business and policy. He is also responsible for assisting the research team through creating and maintaining research briefings on various industry topics. He earned his bachelor’s degree in economics from Boston College.

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