Governor's budget creates disincentives to work under "MA-EPD"

Disturbing changes to MA-EPD are proposed in the Governor’s recently released budget.  MA-EPD stands for “Medical Assistance for Employed Persons with Disabilities,” the landmark work incentive established with strong, bipartisan support by the 1999 Minnesota legislature.   MA-EPD allows people with disabilities who work to retain needed medical assistance (MA) coverage without impoverishing themselves.  Currently, people on MA-EPD pay a premium of 10% of income (earned + unearned) that exceeds 200% of the federal poverty guidelines.

The Governor’s budget proposes to eliminate the current MA-EPD premium structure and replace it with a new premium on 100% of unearned income that exceeds the MA Income Standard.  Currently, the MA Income Standard is $482 per month.  The Governor proposes to raise the standard to $696 per month.   As under current law, an additional $20 would be disregarded, bringing the premium to 100% of unearned income that exceeds $716 per month.

Here’s what the Governor’s proposal would mean to someone on MA-EPD who receives $850 per month on Social Security Disability Insurance (SSDI) and earns $700 per month from employment:

Total gross income: $1,550/month ($18,600/year)

Current premium: $15/month
 $1,550  Gross monthly income
 minus  $1,392   200% of Federal Poverty Guidelines for single person     $158
times  10%     
$15.00 (cents are dropped)

Proposed premium: $134/month
$850 unearned income (SSDI)
 minus $696 proposed MA Income Standard
 $154
 minus  $20
$134

It’s safe to say that most Minnesotans would be unable to absorb an increase of over 800% in their health insurance premiums.

According to the Governor’s budget, the proposed changes are designed to “promote increased work activity and earnings of MA-EPD enrollees” and “discourage nominal work effort of MA-EPD enrollees”.  It’s not clear how this is possible since the enrollee in the example above would pay the same premium of $134 per month regardless of whether they earned $700 per month or $50 per month.

There is no clear evidence that a problem with MA-EPD even exists.   The budget proposal cites April 2000 statistics, rather than using more recent statistics, which show that MA-EPD enrollment is leveling off.  In the Fall of 2000, new rules were established, clarifying and strengthening the work requirements under MA-EPD, in order to discourage the few people who might try to take unfair advantage of MA-EPD.  County financial workers have barely had a chance to implement these new rules, let alone determine their impact.

Before policy changes are made, several questions need to be answered:
* Does MA-EPD promote increased employment of people with disabilities over time?
*  Are costs to MA reduced as more individuals gain access to employer health coverage?
*  Are costs to other government programs (Food Stamps, subsidized housing, etc.) reduced as MA-EPD enrollees increase their level of employment?
*  Are health care costs reduced as MA-EPD enrollees go to work and lead more productive and active lives?  (For example, does working and feeling productive reduce hospitalizations for people with mental health disorders?  Does it reduce the number of pressure sores and urinary tract infections of people with physical disabilities who might otherwise be inactive all day?)

These questions will be answered in the next year under a new federal grant to conduct a comprehensive evaluation of MA-EPD.  It is reckless not to wait for the results before proposing drastic changes to the program.

The proposed changes would unnecessarily complicate a premium structure that has, up to now, been simple for people with disabilities, family members, county financial workers, and legislators to understand and administer.  The proposal also fails to acknowledge SSDI program rules that discourage people from moving off of SSDI.  Individuals risk losing their entire SSDI check if they earn over $740 per month.  If the individual in the example above gave up their $850 SSDI benefit, they would have to more than double their earnings of $700 to retain the same total income of $1,550 per month.  This may be feasible for some people, but is not realistic for others. 

If the Governor wants to promote increased work activity and earnings, his time would be better spent advocating at the federal level for a more gradual phase-out of SSDI benefits as earnings increase.  This would allow people with disabilities to work to their capacity without experiencing a reduction in their overall income.   It would give more people the chance to build up their stamina and work history so they can move off of SSDI and other government programs.   Combined with MA-EPD, this would be a tremendous incentive for more people with disabilities to help meet employer demands for qualified workers in a time of low unemployment.

Legislators need to hear from you that MA-EPD does not need to be changed.  If possible, tell your own personal story about how this program has helped you. [Editor’s note: Names, addresses, and phone numbers of all Minnesota State legislators appear on page 9.]

-Joel Ulland, Public Policy Manager, National Multiple Sclerosis Society – MN Chapter