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Medicaid waivers that take coverage away from people not meeting work requirements have steep administrative costs, a Government Accountability Office (GAO) report notes. Nevertheless, the report adds, the federal Centers for Medicare & Medicaid Services (CMS) — which approves such waivers — does not require states to include administrative cost estimates in waiver proposals, and it does not factor these costs into its own budget calculations.
As the GAO report makes clear, policies that take health coverage away from people who can’t meet rigid work and reporting requirements don’t just cost eligible beneficiaries their coverage; they also require a costly bureaucracy to implement. Agencies or managed care organizations (MCOs) must send notices and conduct outreach, modify computer systems to track exemptions and work hours, and hire staff to answer questions, process exemption requests, and track compliance.
GAO analyzed the implementation costs in five states with CMS-approved work requirement waivers, ranging from $6.1 million in New Hampshire to $271.6 million in Kentucky. (Beyond the five states that GAO studied, other states have estimated similarly large costs to implement work requirements, and we summarize the full set of public estimates below.)
GAO’s estimates don’t even include all costs associated with the waivers. Some states couldn’t estimate their higher payments to MCOs or other health plans to administer the requirements, and others couldn’t estimate ongoing costs, such as for staff to process exemptions. Many states planned to use non-Medicaid funds, such as from the Temporary Assistance for Needy Families (TANF) program, to cover some costs, which they excluded from their estimates.