Expanding Medicaid coverage for the disabled beyond existing income limits will boost their ability to work and simultaneously save the government money.
That’s the premise behind three Robert Wood Johnson Foundation model programs in Oregon, Vermont, and Wisconsin. The catch is that most of the money saved is likely to go to federal programs from which the states do not benefit.
While this poses a problem for states, the federal Social Security Administration (SSA) also is funding the concept in hopes of developing a national model that could be rolled out across the country. Wisconsin and Vermont are two of 12 states in a five-year $25 million SSA grant program to establish model federal-state incentive programs.
"We want to make sure that those individuals with disabilities who want to work have access to programs that will allow them to do so," Social Security Commissioner Kenneth S. Apfel said in announcing the awards. The grants will help states develop programs of "services and support for their residents with disabilities that will increase job opportunities for them and decrease their dependence on benefits—including Social Security and Supplemental Security Income," he said.
The key to successful work-incentive programs, advocates say, is understanding the link between health care and employment.
"When we first started talking about this two to three years ago, we would not have looked at employment as where we needed to be devoting our resources," says Jay Wussow, deputy national director of the foundation’s Building Health Systems for People with Chronic Illness program. "It took some educating for us to realize that there is this fundamental link between access to the work force and health care. We hope these projects will become national leaders in helping other states with the same issue."
Government health benefits for the disabled typically are tied to eligibility for Supplemental Security Income (SSI) or Social Security Disability Income (SSDI), and the fear of losing them can encourage people to remain on income support even when they might be able to work. Demonstration projects in the Robert Wood Johnson Foundation project help maintain Medicaid coverage for disabled beneficiaries even if they earn incomes too high to remain eligible for federal income assistance. (For additional information on SSDI and SSI, see related story, p. 6.)
"We know access to health care is a barrier to getting people employed," says Natalie Funk, a Social Security Administration senior policy analyst who manages work-incentive grants within the SSA’s Office of Disability. "Our particular focus is to let states come up with solutions and test them."
A November report from The Presidential Task Force on Employment of Adults with Disabilities targets current federal policies that "punish rather than support" disabled people who are trying to wean themselves off public assistance. Removing health care and cash benefits before wages can replace the value of these benefits is "contrary to our nation’s commitment to protect workers," the report says.
"Health care needs to be supplied for people with disabilities or they’ll never seek employment," task force executive director Rebecca Ogle says. She notes that the unemployment rate of adults with disabilities hovers around 70%, and a recent survey of people on SSI and SSDI showed 80% were willing to accept employment if certain barriers were removed.
The Robert Wood Johnson Foundation projects are attempting to address this problem in a way that will allow Medicaid programs to provide essential support services necessary to allow the disabled to work, while not increasing and perhaps even saving net dollars spent.
Vermont’s Work Incentive Initiative involves a series of reforms, including a Medicaid buy-in, a relaxing of the income threshold for SSDI beneficiaries, a peer-counseling system, and a focused mental health employment effort. In addition to the Robert Wood Johnson foundation grant, the state has received a five-year, $2.3 million grant from the Social Security Administration and is seeking waivers from the SSA to relax the SSDI income threshold.
"There’s only so much you can do at the state level," says Peter Baird, project director of the Vermont Work Incentives Program. "The real barriers are at the federal level."
The Medicaid buy-in would allow people on SSDI to replace Medicare benefits with the more generous Medicaid package when their monthly incomes exceed $500. Premiums would cap out at $40 per month when the person earned an annual income of $24,000.
The Balanced Budget Act (BBA) of 1997 already allows state Medicaid programs to include working SSI beneficiaries in families with incomes up to 250% of the federal poverty level. But the BBA does not make any provisions to return some of the cost savings that accrue to the federal government back to state Medicaid programs, so the provision largely has been ignored.
"It saves the federal government money, but it doesn’t do jack for the states," observes Ms. Ogle. Federal legislation that would have rerouted some of the savings from such disability work incentives back to the states (SB 1858) failed in the last session of Congress.
Vermont’s peer counseling will try to replicate the "remarkable success" of a similar program among the chronically unemployed in the state’s vocational rehabilitation program. "We found that the big problem for them was social isolation. Within six months [of the start of the program], 80% percent of them were employed," Mr. Baird says.
The mental health initiative implements a team approach to care delivered through community mental health centers and places an employment specialist on each treatment team. The Dartmouth College model on which the initiative is based saw the employment rate of a group of mental health patients rise from 7% to 25% over a five-year period.
The big snag at this point is securing federal approval to allow Vermont SSDI beneficiaries to earn more than $500 monthly without losing their cash benefits. Vermont wants the Social Security Administration to reduce SSDI cash awards to working people gradually, $1 for every $2 earned over the threshold. The state also needs federal approval to guarantee that people who participate in the project and try to work won’t lose their benefits if they opt for conventional disability benefits later, Mr. Baird says.
Congress has let lapse the legislative authority that would allow the SSA to grant that kind of flexibility. Renewal of that authority was part of a sweeping package of employment and disability reforms contained in the failed Work Incentives Improvement Act (SB 1858), sponsored by Sens. Jim Jeffords (R-VT), Ted Kennedy (D-MA), and Tom Harkin (D-IA). The Presidential Task Force in its November report endorsed the Jeffords-Kennedy provisions that would expand Medicare and Medicaid for the disabled who attempt to return to work.
Without the guarantee of future benefits, Vermont will not enroll people in the program. Other program officials say the guarantees are crucial to the success of any disability employment initiative. "What we don’t want to do is get in this gotcha game," says Doug Stone, co-director of the Oregon Employment Initiative. "If you have a benefit based on the fact that [a person] can’t work, there’s a fear of saying, Now, I want to work.’ What if it doesn’t work out?"
State officials in Oregon, in an amendment to their Medicaid plan, took advantage of the Balanced Budget Act to raise the annual SSI income eligibility threshold from $20,000 to $40,000. For those employees who are lucky enough to land jobs with health benefits, state officials are exploring ways to continue Medicaid coverage for services employer plans don’t cover. Employer-sponsored health benefits typically are leaner than Medicaid, particularly for services such as those from a personal care attendant. Attendant services often are indispensable for people with disabilities—regardless of whether they are in the work force—and can cost $1,500 to $2,000 per month.
"There’s a fear that a person with disabilities may drive up health care costs. What we want to do in Oregon is create a public-private partnership to help address those concerns," Mr. Stone says.
Contact Mr. Wussow at (619) 279-0700, Mr. Stone at (503) 945-5836, Mr. Baird at (802) 241-2127, and Ms. Ogle at (202) 219-6081.
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