Nebraska First State to Implement Medicaid Work Requirements, Leading to Coverage Loss

On Saturday, Nebraska will become the first state to remove people from Medicaid for failing to meet new work requirements signed into law by President Trump.

The state's Medicaid director, Drew Gonshorowski, told Tradeoffs in an interview that roughly 200 Nebraskans will lose their coverage on Aug. 1. "We've ensured that we have extra steps in place making sure we review any denial multiple times before it goes out the door," he said. "We don't want folks falling through the cracks on this."

Under new federal rules, about 20 million people in 44 states will need to work or volunteer 80 hours per month, attend school or participate in job training to keep their Medicaid benefits. People with disabilities or serious illness, parents of young children, caregivers and other select groups are exempt.

Trump's big budget law, signed last year, created the work requirements. States must implement them by Jan. 1, but Gonshorowski said Nebraska decided to launch months early, in part, because he believes these new rules will help people move toward economic stability.

"It is an opportunity to build something that can reach out a hand to our membership," he said. "Why wait?"

Gonshorowski and other supporters of work requirements argue that the policy will help push people out of poverty and save the federal government $325 billion over 10 years.

Opponents point to research that found previous work requirement policies did not lead to more people getting jobs, and many people who lost coverage were either unaware of the rules or stymied by paperwork. Recent estimates vary on how many people will lose coverage as a result of the new requirements — ranging from as few as 3 million to as many as 8.6 million by 2028. That includes an estimated 30,000 people in Nebraska.

In a wide-ranging interview with Tradeoffs, Gonshorowski said Nebraska is well-positioned to take the lead on the biggest change to Medicaid since the Affordable Care Act because it runs its own eligibility system. The state can confirm the compliance of about three-quarters of people subject to work requirements without asking them for additional information, he said.

"I can get on the system, I can make a little request and … without reaching out to the member, we can confirm that they're compliant with work requirements," Gonshorowski said.

He added that Nebraska also benefits from its small size and number of people subject to work requirements — about 70,000. "We're a small state," he said. "We can really have a hands-on process early on to ensure that all of these decisions are correct."

The state sent out tens of thousands of letters, text messages and emails, and aired radio and TV ads informing residents of the new requirements. But advocates like Amy Behnke, who leads the Health Center Association of Nebraska, said the state's notices were confusing and left many low-income people uncertain if the new rules apply to them.

Tradeoffs tested Nebraska's Medicaid help line and ran into long waits, a dropped call and problems getting through to the Spanish-language line. Nebraska officials said their average wait time is 10 minutes, and Gonshorowski said his team is meeting on a near-weekly basis with federal officials to make improvements to the state's outreach and communication efforts.

As people begin to lose coverage on Aug. 1, Gonshorowski said he will be watching the number of people who appeal and ask for Medicaid fair hearings to challenge their termination.

"I view this as the ultimate bellwether on whether or not you got your process right on implementation," Gonshorowski said. "You can imagine a world where a state gets that very wrong because you missed that they had a disability, or you missed that they had earned income every month. That's the thing that keeps me up at night. That is the one scary number."

Gonshorowski said his team is working closely with the state's labor department to connect people who lose coverage with job opportunities.

"We have this new data stream in our program," Gonshorowski said. "I think that amidst all this controversy, one of those great opportunities in this implementation is for states to use that data for good, too."