No New Federal Funds for Workforce Services for People at Risk of Losing Medicaid

By Elizabeth Lower-Basch and Jessica Gehr

Yesterday, the Centers for Medicare and Medicaid Services (CMS) announced it would allow states to impose work requirements as a condition of eligibility for health insurance under Medicaid. Because additional eligibility requirements have previously been rejected as being inconsistent with the health coverage purpose of Medicaid, this marks a departure from longstanding federal policy. At least 10 states have already asked CMS for permission to impose such requirements.

These requirements will increase the number of people who must be served by local workforce development systems—without offering any new federal resources to workforce programs. The CMS announcement explicitly prohibits Medicaid funds from being used for workforce activities or supportive services. This prohibition flies in the face of  states being required by CMS to “assist beneficiaries in meeting work and community engagement requirements and to link individuals to additional resources for job training or other employment services, child care assistance, transportation, or other work supports to help beneficiaries prepare for work or increase their earnings.” The letter also states that CMS “will not provide states with the authority to use Medicaid funding to finance these services for individuals.”

The consequence of Medicaid work requirements is that workforce development programs will be expected to provide services to more participants without additional funding. Additionally, workforce agencies will have to monitor participants’ hours of participation in “work or community engagement” activities—increasing administrative time and costs for these programs.

Already, workforce development funding is insufficient to meet the need. Federal investment in employment and job training services has declined dramatically over the last 40 years. In the late 1970s, Congress invested $24 billion annually (in constant 2017 dollars) in workforce training and employment services; today, it’s approximately $5 billion. Moreover, just since 2001, the core Workforce Innovation and Opportunity Act (WIOA) grants to states have been cut by 38 percent in real terms. With new Medicaid clients to serve and no corresponding increase in funding, workforce programs will be stretched even further.

Adult education services reach only 6 percent of the population that could benefit from services. And, the nation’s current workforce system serves only a fraction of the eligible youth and adult population that require intensive services and skills development. For example, WIOA title I Youth workforce programs report about 100,000 “exiters” each year and WIOA title I Adult programs have annually exited around 1 million participants in recent years, compared to nearly 5 million out-of-school youth and more than 24 million adults who need occupational skills training to advance their careers. With the new decision to require Medicaid enrollees to work, this gap between needs and services will only continue to grow.

If states attempt to serve more recipients with existing funding, they will likely be forced to shift dollars away from providing quality education, training, and employment services and instead provide less intensive services, such as low-touch job search assistance. Research shows that programs emphasizing work-based learning and occupational training lead to industry-recognized postsecondary credentials that meet current and future labor market demands of specific industry sectors with a stronger likelihood of improving long-term employment and earnings among lower-income participants. By contrast, programs that primarily emphasize mandatory job search are less likely to help low-income people achieve increased self-sufficiency.

There is no evidence that requiring Medicaid recipients to work will promote either health or employment—in fact, taking health care away from people makes it harder for them to work.  These proposals are being promoted based on false stereotypes that assume low-income people do not wish to work. Most of the state waiver proposals submitted provide little or no detail about the work-related activities that will be provided, or how they will be funded. Many of them seem to assume that their state’s workforce development system has ample capacity to serve thousands—or tens of thousands—of additional people, many of whom will require supportive services in order to participate. Others include language copied from state Temporary Assistance to Needy Families (TANF) plans—which could result in Medicaid recipients losing their health coverage if they do not receive credit for participating in training or attending school.

Workforce development advocates and practitioners need to speak up and make sure that the state and local officials who design these programs understand what is required to provide high-quality services that will actually improve participants’ employability and labor market outcomes.