Capitol Correspondence - 08.25.17

New Kaiser Brief Looks at Lessons Learned from TANF Work Requirements

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On August 18, the Kaiser Family Foundation (KFF) released a new issue brief titled, “Medicaid Enrollees and Work Requirements: Lessons from the TANF Experience.” The brief comes against the context of the Trump administration’s signalling that it will allow and even encourage states to use Section 1115 demonstrations to approve provisions involving “training, employment, and independence.” The brief looks at the experience of work requirements on the Temporary Assistance for Needy Families (TANF) program to draw conclusions about the impact similar requirements would have on Medicaid beneficiaries. In the TANF program, states have discretion on how to administer work requirements, but are held to certain standards and face penalties if they fail to meet the TANF work performance measure. 
One finding of the research is that TANF enrollees work regardless of whether they are required to do so, suggesting that work requirements have little impact on increasing long-term employment. Additionally, most TANF enrollees work in low wage jobs and remain poor despite being employed. Individuals who do not work often face significant barriers to employment, including physical and mental health conditions, addiction, low educational attainment, limited work experience, criminal records, domestic violence, and lack of affordable and reliable child care. Even programs that are the most successful at offering services to address employment barriers leave the majority of TANF enrollees unemployed. Additionally, the brief shows that the TANF work requirement has created the unintended consequences of higher administrative burden on state agencies and adverse impact for enrollees who are likely eligible for an exemption based on a disability. 
The brief then looks at lessons learned and implications of work requirements for Medicaid that can be gleaned from TANF research. The brief notes that currently nearly 6 in 10 nonelderly adult beneficiaries of Medicaid are working, despite there being no work requirement. In Indiana, which proposed to add a work requirement, the state estimated that 70% of Medicaid enrollees would not be subject to work requirements because they are either already working or would qualify for an exemption. Another state, Maine, estimated that only 7% of its Medicaid enrollees would be subject to a work requirement if it were imposed. The brief also notes that because many jobs held by Medicaid enrollees do not offer health insurance, the need to cover these employers through Medicaid would not decreased. In terms of being cost-effective, the research shows that the amount of TANF spending on work activities and supports is higher than what states pend to implement work requirements. 
The brief concludes by noting that health coverage is critical in order to keep people who are able to work in the workforce. To impose TANF-like work requirements on Medicaid beneficiaries could lead to unintended consequences including terminating coverage for those who are most likely to need it, reducing the number of people working, and higher administrative burdens and costs.