Gov. Henry McMaster's administration wants to move forward with a plan to roll out Medicaid work requirements for low-income adults, even after the federal government announced in February the requirements would likely soon be eliminated.
McMaster has advocated that employment not only helps families financially, it makes them healthy. Another key point in his administration's argument to impose work requirements is that current eligibility rules create "an irrational incentive" for low-income adults to remain poor, because extra income might kick them out of the Medicaid program and into a health insurance "coverage gap."
In a prepared statement, S.C. Medicaid spokesman Jeff Leieritz said this creates "a roadblock to working low-income adults’ ability to rise above the poverty level."
South Carolina was one of several states allowed by former President Donald Trump to attach work requirements to the low-income health insurance program. “Healthy Connections Works” would have eventually required adults with Medicaid coverage in South Carolina to prove that they spend at least 80 hours a month working or engaging in other productive pursuits outside the home, such as school, job skills training or community service. The work rules haven't been implemented yet.
Now it seems unlikely they ever will be. In a letter to the South Carolina Medicaid agency dated Feb. 12 — a little more than three weeks after President Joe Biden took office — the federal Centers for Medicare & Medicaid Services laid out several reasons why the work rules were “infeasible," including the fact that the ongoing COVID-19 pandemic has significantly impacted employment opportunities. McMaster's Medicaid agency was given 30 days to respond.
In a letter dated March 11, the department did. In his response, Acting S.C. Medicaid Director T. Clark Phillip pointed out that some adults in South Carolina fall into an insurance coverage gap because they earn too much money to qualify for Medicaid coverage, but not enough to qualify for a discounted plan on HealthCare.gov.
The work requirements, he wrote, provide "a critical pathway to financial independence for low-income workers by removing the current financial disincentive to earn above 67% of the federal poverty level," at which point they would normally make too much money to be approved for Medicaid coverage in South Carolina.
The work requirements, if implemented, would allow these adults to earn more and keep their Medicaid plan even if they exceed the income cap. Once their wages matched or exceeded the federal poverty level — which was set at $12,760 for a single adult last year and varies based on household size — they would then qualify for subsidies through the federal health insurance marketplace, which offers private plans at deeply discounted rates.
In short, the Medicaid agency has argued that the work requirements would help adults bridge the coverage gap.
Sue Berkowitz, director of the S.C. Appleseed Legal Justice Center, said the only reason the coverage gap exists at all is because McMaster's administration and conservative lawmakers in the Statehouse won't expand Medicaid eligibility under the Affordable Care Act.
When Congress passed the sweeping health care reform bill in 2010, lawmakers intended for everyone in the country whose income fell below 100 percent of the federal poverty level to qualify for Medicaid coverage. But a 2012 U.S. Supreme Court decision left the expansion of Medicaid eligibility up to each state. Nine years later, South Carolina is one of only 12 remaining states that hasn't expanded Medicaid. In 39 states and the District of Columbia, the coverage gap doesn't exist because every adult living under the poverty level qualifies for a Medicaid card.
"There is no disincentive" to earn more money, said Berkowitz, who has opposed Medicaid work requirements from the beginning. "People are not working for sub-poverty income on purpose. People are working for sub-poverty income because those are the jobs that are available to them."
McMaster spokesman Brian Symmes said expanding Medicaid to close the insurance gap in South Carolina is an "oversimplification that discounts the need for the state to remain fiscally responsible."
"The key component of this (Healthy Connections Works) initiative is incentivizing South Carolinians to find gainful employment or further their education," Symmes said. "Simply expanding Medicaid would be wildly irresponsible from a fiscal standpoint and would have the opposite effect of the governor’s ultimate goal, which is to lift South Carolinians out of poverty."
It is unclear how long the federal government will now take to decide the final fate of the Medicaid work requirements. If it deems that the program will be eliminated, South Carolina could request a hearing to challenge that determination.
From the outset, the plan to roll out these rules in South Carolina and elsewhere has faced significant legal challenges. In related news on Thursday, the U.S. Supreme Court canceled upcoming oral arguments scheduled for March 29 involving Medicaid work requirements in Arkansas and New Hampshire.