The Department of Health and Human Services recently issued new guidelines encouraging states to implement work requirements in their Medicaid programs.
Kentucky has already moved to impose these requirements and several other states are considering similar rules. Proponents and opponents of work requirements disagree about the net effects on employment and the risks to the access to health care of vulnerable groups.
About 36 percent of Medicaid-eligible low-income people with any mental illness and 44 percent of those with a serious mental illness do not work.
Some in this group will not be required to work, because they qualify for Medicaid because of a work disability under the Social Security criteria and are automatically exempt from work requirements.
However, only about half of Medicaid-eligible adults who have a mental illness and do not work are classified as disabled according to these criteria. What will happen to the others?
The Health and Human Services (HHS) guidance and Kentucky’s approved waiver applications recognize that people who are disabled or “medically frail” should be exempted from work requirements.
Unfortunately, the nature of mental and addictive illnesses suggests that this exemption process will be challenging to implement, both for states and for beneficiaries.
As a consequence, people with mental and addictive illnesses are highly susceptible to being removed from Medicaid through these requirements.
Moreover, taking Medicaid — and the care it finances —away from people with these conditions is likely to further reduce their participation in the labor market.
The first problem that the medical frailty exemption will pose is that states with waivers will need to establish a definition of frailty that considers mental and addictive conditions. The difficulties of developing and implementing such a definition are highlighted in the literature that examines the Social Security disability process.
Well-established and uniform national standards have long been used for assessing psychiatric disability for the purposes of determining Social Security disability determination. Despite years of experience with the standard, however, there is a great deal of inconsistency, and consequent error, in the disability determination process across states.
For example, one study examined the experience of low-income women who applied for Supplemental Security Income (SSI) benefits but had their applications rejected. Although they appeared not to meet the disability criteria, these women fared worse over time, in terms of housing stability, than either those approved for SSI or similar women that did not apply. They were just half as likely to work following the determination as similar women who did not apply for SSI.
These difficulties of adjudication will be multiplied in defining medical frailty for the case of mental illnesses. These conditions are often co-morbid with at least one other chronic medical condition; 18 percent to 25 percent have both a mental illness and a substance abuse problem; and over 20 percent report their health to be fair or poor.
Many have intermittently recurring illnesses – their conditions may be stable, with medication and appropriate treatment, for some period of time, punctuated by exacerbations that lead to deteriorations in functioning and make it impossible for people to work.
The second problem with implementing the medical frailty requirement in the case of mental illness has to do with the effects of these conditions on beneficiaries themselves. The burden of proving medical frailty in the Kentucky waiver program will generally fall on the recipient. In this case, that means it falls on a person with an illness that interferes with cognition, executive function and mood.
Decades of policy and practice have been invested in encouraging people with mental health and addictive conditions to seek out and maintain care — even to compel people to get care — because the conditions themselves interfere with decision-making and the care-seeking process.
In fact, many people with mental illness who are initially rejected by the Social Security process do not appeal or follow up simply because their conditions prevent them from dealing with the paperwork and administrative processes.
Many will surely drop off the Medicaid program because of failure to complete required paperwork or provide timely reports of changing circumstances.
Ironically, many existing studies suggest that making it harder for people with mental illnesses and substance use disorders to get treatment will make them less likely — not more likely — to work.
Randomized trials show that people, who receive consistent, evidence-based mental health treatments, are better able to succeed in the labor market. Similarly, the results of the Oregon health insurance experiment show that people who won a lottery for enrollment in Medicaid had substantially lower rates of depression, and fewer days when they could not engage in their usual activities (such as work). Treatment, not punishment, is most likely to allow them to participate in the labor market.
For people with mental illnesses, work requirements just won’t work.
Richard G. Frank, Ph.D., is the Margaret T. Morris Professor of Health Economics in the Department of Health Care Policy at Harvard Medical School.