The federal Centers for Medicare & Medicaid Services (CMS) sent a letter to state Medicaid directors on January 11 announcing a policy change that allows states to experiment with how they deliver the public health insurance for low-income residents of their states. The provision that prompted headlines was its suggestion that state officials seek a waiver to Medicaid regulations allowing them to attach work requirements, or what CMS calls “community engagement,” for eligibility among able-bodied adults.

CMS Administrator Seema Verma said the work requirement among eligible adults would “make a positive and lasting difference in the health and wellness of our beneficiaries.”

In a speech to Medicaid officials in November, Verma criticized the Obama administration for focusing on expanding Medicaid enrollment under the Affordable Care Act, rather than helping the poor move out of poverty and into jobs that provide health insurance.

“Believing that community engagement does not support or promote the objectives of Medicaid is a tragic example of the soft bigotry of low expectations consistently espoused by the prior administration,” she said. “Those days are over.”

So far, the states that have applied for the Medicaid waiver that would allow them to impose the work requirement are Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah and Wisconsin. The Kentucky waiver application said it would require most nondisabled Medicaid beneficiaries age 19 to 64 to work at least 20 hours a week.

Medicaid was created in 1965 for families on public assistance and low-income seniors. It is now the nation’s largest health-insurance program and covers 70 million people, or about one in five Americans, and includes pregnant women and newborns, the elderly in nursing homes and people with disabilities.

Opponents of the work requirement say it demonizes the poor and that low-income people will fall through the cracks and could be denied coverage because of technicalities or errors in their paperwork.

We asked FSI senior fellow and Stanford Health Policy faculty member Jay Bhattacharya — a professor of medicine and health economist who is an expert on government policies designed to benefit vulnerable populations — a few questions about the new policy.

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Stanford Health Policy: A study by the Kaiser Family Foundation found that among nonelderly adults with Medicaid coverage — the group of enrollees most likely to be in the workforce — nearly 8 in 10 live in a working family and a majority are working themselves. They also found most Medicaid enrollees who work are working full time but their annual incomes are still low enough to qualify for Medicaid. So who are the Medicaid recipients that the Trump administration is targeting — and to what end?

Bhattacharya: The CMS decision permits states to experiment with work requirements for able-bodied Medicaid enrollees. That is, it does not permit state experiments with work requirements for Medicaid enrollees who qualify because of a disability, or qualify because they are pregnant, or otherwise qualify because of physical or medical incapacity to work. At least as a first cut, the CMS decision permits states to impose work requirements for Medicaid enrollees who qualify through the expansion in Medicaid induced by the Affordable Care Act and does not permit work requirements on traditional Medicaid population who qualified in ways permitted before the ACA. States can also require alternatives to work, including volunteering, caregiving, education, job training and even treatment for a substance abuse problem.

The end goal as stated in the CMS letter is to improve the health and well-being of the able-bodied poor. The logic is that (1) for able-bodied individuals, regular work is an important component of overall health, and (2) all income-linked welfare programs (Medicaid included) induce incentives not to work, or to work less. There is a literature in economics that documents this incentive (see this paper by Aaron Yelowitz.) The mid-1990s welfare reform law required this sort of linking of work and welfare, and CMS argues this decision permits states to align Medicaid with other income-linked welfare programs. If the KFF study is right, the decision will have an effect on a minority (perhaps a substantial minority) of able-bodied Medicaid recipients, since the majority are already working.

Stanford Health Policy: Under current law, can states impose a work requirement as a condition of Medicaid eligibility?

Bhattacharya: For a state to impose a work requirement, they must request a waiver from the Social Security Act to conduct a demonstration project. These waivers are permitted under current law, but are provided at the discretion of the appropriate executive agencies, in this case, CMS. A different administration might decide not to permit these waivers, and I think in general the Obama administration was more reluctant to permit this kind of state experimentation. The main substance of the CMS decision is to broadly signal to states that they will now be willing to provide such waivers.

Stanford Health Policy: Do critics of the work-requirement waiver have valid fears that low-income elderly or disabled people will fall through the cracks on technicalities or challenging paperwork?

Bhattacharya: Paperwork mistakes and problems caused by bureaucratic indifference are always possible when it comes to a program like Medicaid, which has such a complicated variety of paths to qualify. It is an empirical question whether such considerations would be more salient were a state to impose work requirements for a subset of Medicaid enrollees on top of the existing requirements.  Every state has experience with similar work requirements for qualification for other welfare programs, such as temporary assistance for needy families (TANF). Given that, it seems unlikely to me that — because of technicalities or paperwork — additional work requirements would be incorrectly applied to many elderly or disabled people applying for Medicaid.

Stanford Health Policy: Some states have proposed tying Medicaid eligibility to work requirements using waiver authority that may be approved by the Trump administration. What could this mean for Medicaid recipients in those states? In Kentucky, which expanded Medicaid, some state officials have said work requirements could lessen the program’s impact on the state budget.

Bhattacharya: I suppose it could have some effect on state budgets by reducing the number of people who qualify for Medicaid. I anticipate only a small effect on state budgets, though, because through the ACA, the Feds pay 100 percent of Medicaid costs for people who qualify via the ACA’s income provision, although that gradually phases down to 90 percent in 2020 and remains at that level.

Stanford Health Policy: How will the states that do not apply for the waiver, such as the large-population states of California and New York, be impacted by this change in Medicaid policy?

Bhattacharya: States that do not apply for a waiver will maintain their existing requirement for Medicaid qualification, including no work requirements for able-bodied Medicaid enrollees who qualify through the ACA’s Medicaid provisions.

"As 2018 unfolds, the domestic and international dimensions of Trump’s crisis-ridden presidency are beginning to intersect in wildly unpredictable and potentially disastrous ways. There are signs of preparations for a U.S. military attack on North Korea by mid-year, and a new report by a leading Russian expert on North Korea indicates that the Pyongyang regime “is convinced that the U.S. is preparing to strike.” This would likely be not a full-scale military assault to terminate the North Korea’s tyrannical regime but rather a punishing “bloody nose” strike, either to send a message about American resolve to halt further testing and development of Kim Jong Un’s nuclear weapons program or to actually destroy as much of its existing infrastructure as possible," writes Larry Diamond in The American Interest. Read here. 

Former U.S. ambassador to South Korea Kathleen Stephens spoke on the "PBS News Hour" about the first high-level talks between North Korea and South Korea in more than two years. The two nations agreed to hold future military talks aimed at easing border tensions and the North pledged to send a delegation to the Olympic Games next month.

Stephens called it a good first step and an “all-too-rare positive development” on the peninsula. The decrease in potential for disruptions to next month’s games could—according to Stephens-be seen as the first deliverable by South Korea’s new president, Moon Jae-In, on a promise to reengage with the North.

Ambassador Stephens said it was not surprising that denuclearization did not come up during Tuesday’s talks, noting North Korea’s position that the issue is one to be dealt with the United States. Ambassador Stephens speculated that once the Olympics closed, the peninsula might experience a period of reduced tensions along with confidence building. However, she believes that come the spring there would still remain important questions about military exercises as well as nuclear weapons.

Asked about news reports of discussions within the Trump administration on the possibility of targeted strikes against North Korean military sites, Ambassador Stephens described it as a very risky strategy, adding that the discussions alone could prove unnerving in South Korea as well as North Korea.

The full interview is available on PBS.

In advance of talks between North Korea and South Korea, APARC’s Daniel Sneider says the most immediate threat on the peninsula actually comes from the latter.

In a piece for The Hill, Sneider writes that by embracing North Korea’s offer for dialogue, South Korean President Moon Jae-in—who seeks a peaceful Olympic Games, good relations with China, and reduced tensions with the North—risks diminishing America’s presence in the region.

The challenge for the U.S. administration, accordng to Sneider, is to afford South Korea freedom to explore opportunities for dialogue, while ensuring that such freedom does not result in driving the United States off the peninsula.

In the New York Post article written by Ken Scheve and David Stasavage, the co-authors of Taxing the Rich: A History of Fiscal Fairness in the United States and Europe, the real motivation behind opposition to the GOP tax bill is examined in light of their research. 

To read the full article, please visit the Washington Post (Monkey Cage) webpage.

At least 91 Americans die every day from an opioid overdose. The epidemic has claimed more than 300,000 lives since 2000 and is expected kill another half million over the next decade.

So perhaps it’s time to step up lawsuits against the drug manufacturers that sell the opioids to the tune of $13 billion per year, Stanford Health Policy’s Michelle Mello argues in a commentary in the current issue of The New England Journal of Medicine.

Mello, a professor of law and of health research and policy, and co-author Rebecca L. Haffajee, an assistant professor of health management and policy at University of Michigan School of Public Health, note that although heroin and illicitly manufactured fentanyl account for an increasing proportion of opioid overdoses, the majority of people who are addicted to opioids get hooked on prescribed painkillers.

While clinicians and health-care providers are trying to prescribe fewer opioids, Mello and Haffajee believe litigation is another crucial method to fight the crisis.

“The search for solutions has spread in many directions, and one tentacle is probing the legal accountability of companies that supply opioids to the prescription market,” the authors write.

The final report of President Trump’s Commission on Combating Drug Addiction and the Opioid Crisis details decades of aggressive marketing of oxycodone from 1997-2002 that led to a tenfold rise in prescriptions to treat moderate to severe pain. “To this day, the opioid pharmaceutical industry influences the nation’s response to the crisis,” the report said, noting the industry had sponsored some 20,000 conferences for physicians on managing pain with opioids while claiming their potential for addiction was low.

Mello and Haffajee argue that similar to the early cigarette promotions by Big Tobacco, opioid manufacturers have failed to adequately warn patients about addition risks on drug packaging and in their marketing campaigns.

“Some recent claims allege that opioid manufacturers deliberately withheld information about their products’ dangers, misrepresenting them as safer than alternatives,” they write.

Early attempts to bring class-action suits against opioid manufacturers have encountered procedural barriers. Judges typically find that proposed class members lack sufficiently common claims because of different circumstances surrounding opioid use and clinical conditions.

But the tide may be turning. There has been an uptick in litigation against Big Pharma since Purdue Pharma, the maker of the blockbuster painkiller, OxyContin, agreed in 2007 to pay $600 million to settle charges that it misled federal regulators, doctors, and patients about the drug’s risk of addiction and its potential to be abused.

“As the population harmed by opioids grows and more information about the population is documented, it becomes easier to identify subgroups with similar factual circumstances and legal claims — for example, newborns with neonatal abstinence syndrome,” they said.

Perhaps most promising, the authors write, is the “advent of suits brought against drug makers and distributors by the federal government and dozens of states, counties, cities, and Native American tribes.

“Because the government itself is claiming injury and seeking restitution so that it can repair social systems debilitated by opioid addiction, these suits avoid defenses that blame opioid consumers or prescribers,” they said. “They also garner substantial publicity.”

The government is borrowing from the playbooks used to sue tobacco and firearms companies, relying on four strategies:

• Focus on the “public scourge” created by the opioid manufacturers due to their oversaturation of the market, arguing that opioids constitutes a public nuisance;
• Paint the opioid companies’ business practices as deceptive;
• Call out the manufacturers’ lax monitoring of suspicious opioid orders; and
• Ask courts to make companies disgorge the “unjust enrichment” they have reaped at the government’s expense through their unfair business practices.

Two large settlements have occurred in state cases that included unjust enrichment claims, the authors note, although the pharmaceutical companies avoided admitting fault. The Commonwealth of Kentucky settled with Purdue Pharma for $24 million in 2015 over allegations that it had profited while Kentucky was left paying associated medical and drug costs of those who became addicted.

Earlier this year, drug wholesaler Cardinal Health Inc. agreed to pay $20 million to settle a lawsuit brought by West Virginia’s attorney general over accusations that it flooded the market with opioids in a state that now has the highest opioid overdose rate in the nation.

Such lawsuits have garnered a lot of media attention and contributed to pressure on the U.S. government to take action against the abusive practices of drug manufacturers and distributors.

“Win or lose, lawsuits that very publicly paint the opioid industry as contributing to the worst drug crisis in American history put wind in the sails of agencies and legislatures seeking stronger oversight,” Mello and Haffajee write. “Together, litigation and its spillover effects hold real hope for arresting the opioid epidemic.”

Listen to a podcast with Haffajee talking about the opioid crisis.