Arkansans losing Medicaid due to work requirements are likely to face limited private insurance options
Four months into the implementation of new work requirements, the Arkansas Department of Human Services reported that 8,462 Arkansans have lost Medicaid coverage because of failure to comply: 4,353 people lost coverage in September, and 4,109 people lost coverage in October. These people did not report 80 hours of work or other qualifying activities (education and training, volunteering, job search, job search training, and health education classes) per month for three months since the Arkansas Works program was implemented in June 2018.
Our analysis finds that many Arkansans losing Medicaid coverage are likely to face limited and costly private health insurance options. About three-quarters of full-time, private-sector employees are eligible for employer coverage in Arkansas, but fewer than 1 in 10 part-time, private-sector employees are eligible. On average, annual employee contributions for a single-coverage plan would represent 8.1 percent of annual income for a minimum-wage, full-time worker and 16.2 percent of annual income for a part time worker—above the 2.04 percent premium limit for such workers in the Marketplace.
Cindy Gillespie, director of the Arkansas Department of Human Services, has stated that “if [enrollees] are working, they are not going to lose their [Medicaid] coverage.” But Arkansans working fewer than 80 hours a month and those working 80 hours or more who do not report their work hours could risk losing Medicaid and be unable to obtain private health insurance coverage through an employer.
In September, 98.7 percent of people who failed to report 80 hours of work or other qualifying activities reported no hours at all. We don’t know whether these enrollees weren’t working the required number of hours, weren’t working at all, or were working and could not report their hours through the online portal.
Arkansas’s Medicaid work requirements are being reviewed in court. One question that has arisen is how many people will lose health insurance coverage because of the requirements. This will depend on whether people losing Medicaid coverage have access to affordable insurance through an employer or the Marketplace. A stated goal of the Arkansas waiver is “facilitating transitions between and among Arkansas Works, employer-sponsored insured (ESI), and the Marketplace for Arkansas Works beneficiaries.”
Federal subsidies to purchase insurance through the Marketplace are available only for those with income between 138 to 400 percent of the federal poverty level (FPL). Enrollees who lose Medicaid coverage because of work requirements would therefore have to find a job with an annual income of at least $16,754 to qualify for subsidies.
How accessible is employer-sponsored insurance?
We used 2017 information from the Medical Expenditure Panel Survey Insurance Component to assess potential access to and affordability of ESI from a sample of 399 private Arkansas employers (we find similar patterns in earlier years of data, but estimates vary across years; table 1).
To substitute employer coverage for lost Medicaid coverage, employees would need to receive a health insurance offer from their employer, be eligible for that coverage, and be able to afford any required premium contribution. In Arkansas, 83.1 percent of full-time and 62.6 percent of part-time, private-sector employees worked at a firm that offered health insurance in 2017.
But even among firms that offer insurance, not all employees are eligible for coverage based on such factors as hours worked or length of employment. In 2017, 77 percent of full-time, private-sector employees in Arkansas were eligible for ESI compared with only 8.6 percent of part-time employees. Eligibility rates for full-time employees were particularly low at small firms (36.2 percent in 2017)—and in 2015, just over one in six private-sector employees in Arkansas worked at a firm with 20 or fewer employees.
How affordable is employer-sponsored insurance?
For people who lose Medicaid coverage under Arkansas Works but are eligible for employer coverage, the required employee premium contribution is a key factor in determining coverage affordability.
On average, annual employee contributions were $1,253 for single-coverage plans, or 8.1 percent of a minimum-wage worker’s annual income working full time (35 hours a week). A minimum-wage employee who works part time (17 hours a week) would have to pay 16.2 percent of his or her annual income to remain insured, provided the firm did not prorate the employer contribution to align with hours worked. If the employer contribution were prorated, the employee contribution would rise further.
These premium shares are well above the Marketplace premium limits under the Affordable Care Act of 2.04 percent of income for people earning 100 percent of the FPL and 4.08 percent of income for people earning 150 percent of the FPL—a range that includes full-time, minimum-wage workers.
Our analysis indicates that working Arkansan Medicaid enrollees who fail to meet the 80-hours-a-month reporting requirement are likely to face limited private health insurance options.
Few private firms in Arkansas offer employer coverage to part-time employees. Moreover, for full-time workers, finding an offer of employer coverage could prove difficult given that employees at most small firms are not eligible for that coverage.
But even for the Medicaid enrollees who would be eligible for employer coverage, obtaining such coverage would be cost-prohibitive for many, with costs constituting a larger share of income than deemed affordable under the Affordable Care Act.
Governor Asa Hutchinson speaks at a news conference Monday, March 5, 2018, at the state Capitol in Little Rock, AR, with Seema Verma, the head of the Centers for Medicare and Medicaid Services. Verma approved a state plan to require that thousands of people on its Medicaid expansion seek ways to work or volunteer. Traditional Medicaid recipients are not affected. Arkansas is the third state to win permission, following Kentucky and Indiana. (AP Photo/Kelly P. Kissel)