Yesterday, the Center for Medicare and Medicaid Services (CMS) released a guidance letter to state Medicaid directors saying that CMS would welcome Section 1115 Waiver applications that contained work requirements. The guidance would not provide any extra money for supportive employment or services and it’s logic chain of justifying employment as a condition of receiving healthcare continually confuses correlation and causation. It is a guarantee that there will be a lot of lawyers involved once the first 1115 waiver with work requirements is approved.
Kentucky is highly likely to be the test case. Their 1332 waiver is heavy on work requirements and it is likely to be approved within the next week. Functionally it is designed to force adults off of Medicaid by either explicitly disqualifying people for not working or volunteering enough or by creating paperwork hassle barriers. At the end of the fifth demonstration year, Kentucky projects that roughly 90,000 fewer adults will be covered by Medicaid.
There is something odd in the budget justification. The Per Member Per Year (PMPY) costs of the adult population is projected to be strange for the Legacy Medicaid adult population.
For a guaranteed issued, low or no premium plan, one usually expects that the people with the most significant needs are more likely to sign up and jump through eligibility hoops than people with low expected medical needs. The first person to sign up is far more likely to have cancer or cystic fibrosis or hemophilia or anything else that can routinely create a $100,000 claim than the last person to sign up. We should expect the PMPY to decrease as enrollment goes up and vice versa. The marginal/incremental covered lives are more likely to be healthier/cheaper than the average covered life.
We see that relationship in the Adult Expansion population. By the end of the demonstration, the Adult Expansion population is 15% smaller but the PMPY is 2.4% more. I am unable to look at either the actual claims or the actuarial model that projected the drop-off but the direction makes operational sense. We see the same with the kids as there are slightly more (0.3%) kids covered with a 2.6% reduction in PMPY. The gearing ratios are very different but they are both going in the same direction.
However the Adult Legacy Medicaid covered population which is overwhelmingly medical condition based (including pregnant women) is projected to decrease by 14.1% while costs on PMPY basis decrease by 0.2%. This is odd where enrollment and costs are going in the same direction. The Legacy Adult group has significant variance in medical status so one would expect the individuals with the worst health are more likely to stay than people who either qualify on the basis of income but are in otherwise “decent” health or people who barely qualify on the basis of health status.
This is strange. There might be a good actuarial reason but it is strange on first glance.