REVIEW OF STUDIES REGARDING THE MEDICAID BUY IN PROGRAM

National and state evaluations of these programs have found that MBI enrollees earn more money, work more hours, contribute more in taxes, and rely less on food stamps than people with d

REVIEW OF STUDIES REGARDING THE MEDICAID BUY IN

Study Group: Brigitte Gavin, Marci McCoy-Roth, McCoy-Roth

Strategies; E Sally Rogers, Marianne Farkas, Vasudha Gidugu, Mihoko Maru, Center for Psychiatric Rehabilitation, Boston University

We thank the following Health and Disability Advocates staff members for their thoughtful review: Lisa D Ekman, JD, MSW, Senior Policy Advisor; Sara Salley, Technical Consultant; and Melissa Turner, Project Director, NCHSD Additional thanks to Anne, Reither, for her

suggestions of studies, Director of Medicaid Infrastructure Grants Research Assistance to States (MIG-RATS).

Plain Language SummaryNarrative Review of the Medicaid Buy-In Program

Today, individuals with disabilities have more opportunities than ever before

to engage in the world of work Innovative policies and laws such as the Americans with Disabilities Act have helped to break down structural and accessibility barriers, and cultural norms are shifting to create a more

accommodating environment for individuals with disabilities in the

workplace

The Medicaid Buy In (MBI) program is yet another breakthrough to help

persons with disabilities work and work more Medicaid is typically the

preferred insurance option for people with significant disabilities because it provides affordable access to personal care assistance and durable medical equipment, benefits often absent from traditional, employer-sponsored

health plans Yet, upon entering or re-entering the labor market, individuals with disabilities are often fearful they will lose access to the Medicaid

benefits upon which they rely In response, 42 states and the District of Columbia have established MBI programs that allow persons with disabilities

to “purchase” health insurance through Medicaid by paying a monthly

premium Authorized for states under one of two federal legislations: the Balanced Budget Act of 1997 (BBA) or Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA), state MBI programs enable Medicaid access for people with disabilities who want to work and earn more than is generally allowed under other Medicaid categories

In this review of the Medicaid Buy In literature, we located 30 national and state studies and evaluations of the program since its inception These

reviewed studies all discuss MBI participants’ employment and earnings activities, either across the nation or in specific states, and form the basis ofthis review National and state evaluations of these programs have found that MBI enrollees earn more money, work more hours, contribute more in taxes, and rely less on food stamps than people with disabilities who are notenrolled.i Analysis of SSA earnings data by Mathematica Policy Research, Inc (MPR) shows that, nationwide, an average of 40 percent of participants increased their wages upon enrollment in the MBI program.ii While the

average income of wage-earning participants remains low at $8,237, those

40 percent witnessed a median, inflation-adjusted increase in earnings of

$2,582.iii States evaluations, with few exceptions, also document that MBI programs are helping participants to earn and work more States programs can impact the earnings and employment averages of their MBI participants

in two fundamental ways: attracting participants likely to earn and work more, and helping participants—once enrolled—to increase hours worked and income earned To the first avenue, states can adjust their eligibility parameters (primarily income and asset limits) so that their programs

attract higher earning and higher wealth individuals Regarding the second,

program policies (such as limited work “grace periods”) and support

mechanisms (like coordination with the Social Security Administration’s

other work incentive programs) can help enrolled participants to work and earn more

However, authors of state and national evaluations alike are compelled to recognize that, even with the positive influence of the MBI program, this is apopulation living with often persistent and difficult disabilities As a result, continuous, full-time employment is a challenge This challenge is further compounded by this populations’ high rate of prolonged dependence on federal disability programs, such as Supplemental Security Insurance (SSI) and Supplemental Security Disability Insurance (SSDI), and the income

limits that serve as earnings disincentives past a certain level The MBI program itself is not without imperfections Participants in many states find the program complex and difficult to understand, and work support features,such as employment counseling services, are often underfunded and/or insufficiently marketed

Despite these complications, the reviewed evaluations and studies

document that MBI programs successfully enable participants to engage, or engage more robustly, in the labor market Program enrollment rapidly exceeded projections in many states, clarifying that a high demand for the program exists This growth is likely the result of more qualitative findings

by several states that powerful emotional factors compel participants to work or work more, regardless of the monetary incentive Furthermore,

enrollment in the MBI program causes participants to feel more financially secure, and some states report improvements in mental health associated with increased employment

As states’ MBI programs become more established, and as health care

reform unfolds with the guarantee of coverage for people with critical healthcare needs, it will be important to continue learning from these initiatives Additional experimental studies that examine a cohort over time will help to more conclusively determine the program’s impact on earnings and

employment Also, the results of much-needed experimental initiatives, expected in 2011, will potentially help the MBI program evolve towards a more targeted and comprehensive range of services, as opposed to a

uniform structure for all individuals with a disability Information from these future evaluations and studies should inform policy considerations about how best to structure programs and incentives to facilitate increased

earnings and employment for people with disabilities who want and are able

to work

1. Rationale for the Review.

Today, individuals with disabilities have more opportunities than ever before Innovative policies and laws such as the Americans with Disabilities Act

(ADA) have helped to break down structural barriers that previously

prevented individuals with disabilities from entering public buildings, making the “built environment” more accessible Additionally, the ADA mandated that employers must provide job accommodations for qualified workers with disabilities, which opened even more job opportunities for this population Following suit, advances such as those in medicine, Internet technology and assistive devices have helped improve everyday quality of life for this

population, and have created opportunities for many more to participate meaningfully in the workforce

The Medicaid Buy In (MBI) program is yet another breakthrough that helps persons with disabilities to work and work more Medicaid is typically the preferred insurance option for people with significant disabilities because it provides affordable access to personal care assistance and durable medical equipment, benefits often absent from traditional, employer-sponsored

health plans Upon entering or re-entering the labor market, individuals with disabilities are often fearful they will lose access to the Medicaid benefits upon which they rely this is an alarming prospect for someone trying to maintain a decent quality of life with their disability Authorized for states under one of two federal legislations: the Balanced Budget Act of 1997 (BBA)

or Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA), state MBI programs allow persons with disabilities to “purchase” health

insurance through Medicaid by paying a monthly premium, enabling

Medicaid access to people with disabilities who want to work and earn more than is generally allowed under other Medicaid categories

To date, 42 states and the District of Columbia have established Medicaid Buy In (MBI) programs To ensure proper evaluation and careful development

of states’ programs, the Centers for Medicare and Medicaid Services (CMS)

is monitoring the creation and enrollment of all Buy-In programs CMS

provides Medicaid Infrastructure Grants (or MIGs) directly to states to help them create and continuously research their MBI programs CMS has

contracted with Mathematica Policy Research (MPR) to document states’ decisions regarding their programs, and the observed impact of MBI

programs on participants To execute this on a national level, MPR has built

an integrated dataset with information on MBI participants across the recipient states Supplementing this analysis, several states with MIGs have conducted (or are conducting) their own state-specific evaluations

MIG-These national and state evaluations have found that MBI enrollees earn more money, work more hours, contribute more in taxes, and rely less on food stamps than people with disabilities who are not enrolled.iv The

program’s impact is made more significant due to its reach: as of December

31, 2009, the 37 states reporting enrollment figures under MIGs had more than 150,000 participants in their MBI programs.v Because the purpose of the MBI program is to help persons with significant disabilities obtain and retain work, the outcomes that are most indicative of programmatic success are those concerning earnings and employment

Overall, MBI participants work and earn more than they do prior to program enrollment However, wide variations in how states design and execute theirindividual MBI programs result in a broad range of employment and earnings averages across states’ programs There are two fundamental ways that states can impact these factors: attracting participants likely to earn and work more, and helping participants—once enrolled—to increase hours

worked and income earned This paper examines lessons learned from state and national evaluations, and details best practices for states to establish or modify their programs so that programs can do both

The high level observations are that states can adjust their eligibility

parameters (primarily income and asset limits) so that their programs attracthigher earning and higher wealth individuals Also, program policies (such aslimited work “grace periods”) and support mechanisms (like coordination with the Social Security Administration’s other work incentive programs) can help enrolled participants to work and earn more However, state and

national evaluations alike were compelled to recognize that, even with the positive influence of the MBI program, this is a population living with often persistent and difficult disabilities As a result, continuous, full-time

employment is a challenge The complications posed by their disabilities arecompounded by this populations’ high rate of prolonged dependence on federal disability programs, such as Supplemental Security Insurance (SSI) and Supplemental Security Disability Insurance (SSDI) The income and asset limits of those programs, and particularly the Substantial Gainful

Activity limit of $12,000 (in 2010) for SSDI recipients, impose a disincentive

to earn past a certain income level

This report reviews the majority of existing MBI program evaluations,

including those state and national in scope The authors examined these evaluations to assess whether MBI programs had an effect on participants’ earnings and employment outcomes, as well as to identify any additional positive or negative outcomes In addition to this review of quantitative studies, qualitative reports were also reviewed to enrich the understanding

of the various MBI program models This qualitative evidence illustrates some successful practices that were not fully captured in quantitative

analyses and that may be helpful for any future policy deliberations related

to Medicaid Buy-In programs

2 Objectives of the Review

State Medicaid Buy-In Initiatives and their effect on Earnings and

Employment for People with Disabilities

3 Methods and Procedures

The authors conducted a thorough review of national and state research on Medicaid Buy-In and disability-employment related programs The literature search process involved looking through publications on MBI outcomes by Mathematica Policy Research Institute, Center for Medicare and Medicaid Services, and publications available through State websites In addition

searches were also conducted using PubMed and Google with the following search terms: Medicaid Buy In; Outcomes; Employment; and Earnings

Thirty (30) studies were identified that discussed the impact of the MBI

program on earnings and/or employment for people with disabilities We examined each of the 30 publications for ancestor publications and

suggestions about other studies that might be available In addition to

examining the 30 studies, the lead reviewers contacted several experts in MBI programs; those individuals reviewed the studies located to ensure that the selection was comprehensive and representative

This study is unique among existing literature, in that it combines the review

of national reports, which primarily use combined datasets for analysis, with state-level evaluations, which tend to use a mixed-method approach to

analyze individual state MBI programs This combination of reviews

contextualizes the analysis, and provides an in-depth representation of the existing knowledge on MBI programs

All reports were entered into an Excel spreadsheet (Appendix A) that

catalogues the following characteristics of each:

1 Design (experimental, quasi-experimental, or non-experimental);

2 Sampling, if applicable;

3 Methodology (quantitative, qualitative, or mixed method);

4 Data collection instruments or sources;

rigorous statistical matching method to create a contemporaneous

comparison sample of persons enrolled in the conventional Medicaid

program In Kansas, the Working Healthy MBI program collaborated with the

state’s Department of Revenue to gather income data on 254 continuously enrolled participants, and compared income in the year after enrollment to income in the year prior to the cohort’s enrollment Although states are attempting to replicate experimental conditions, there is a dearth of true experimental studies that would allow researchers to determine the

program’s causal impact on earnings and employment rates in a rigorous way The findings identified from these studies are grouped into two

categories: assessment of earnings and/or employment; or an analysis of theprogram’s structure or processes to inform future policy decisions

There were several limitations to the analysis of the reports presented The start date of each program and the state of the economy during the years studied pose external threats of validity to the findings and lessons learned from each Data systems also proved a challenge For instance, the State Medicaid Management Information System (MMIS), which collects state-level information on the various MBI programs, improved over time As a result, and as Mathematica Policy Research, Inc points out, MMIS data are stronger

in 2003, for example, than data from the previous year There is also a smallgap in capturing all earnings of those in the MBI program The SSA Master Earnings file, which provides much of the earnings data (particularly for the national studies), fails to capture the wages of many self-employed

individuals, as well as those persons with disabilities that are engaged in casual employment or sheltered workshop employment

These problems with the data are also true for the individual state

evaluations States used varying methodology to gather earnings and

employment data from participants Most states collected that information via surveys and figures are self-reported Using this survey approach to collect information on MBI participants also introduces a strong potential for non-response bias – for instance, those who do respond to surveys may haveless severe disabilities, and could be more familiar with the program

4 Reviewers

The primary reviewers for this narrative review of the Medicaid Buy-In

Programs were Marci McCoy-Roth and Brigitte Gavin; the report was

compiled under contract to the Center for Psychiatric Rehabilitation Ms McCoy-Roth is a principal in McCoy-Roth Strategies, a consulting firm to non-profit organizations Ms McCoy-Roth holds degrees in economics, policy analysis and public affairs and communication She served as an officer with The Pew Charitable Trusts for nearly four years, where she was responsible for developing and managing a portfolio of grants, and monitoring grantees progress For the State of Wisconsin, Marci managed an external evaluation

of the state’s long-term care program and developed and oversaw a sponsored evaluation of a Medicaid disability employment program As a research and evaluation consultant for the National Consortium for Health

state-Systems Development, Marci provided strategic planning expertise and

technical assistance in utilizing research to improve systems

Brigitte Gavin, lead evaluator at Roth Evaluations, graduated from Boston University with a B.S in Business Administration, and earned her Masters degree in Social Policy from the University of Pennsylvania Her graduate studies focused on policies and practices to increase the financial security and economic mobility of low-income populations Most recently, Ms Gavin has worked for the Corporation for Enterprise Development (CFED) to

research and design the Work Ready Communities Initiative in North

Carolina, an effort to focus attention and spur action on the issues of

inadequate skill and economic development in the state Until 2009, Ms Gavin worked at The Pew Charitable Trusts where she played a key role in theproject management and coordination of 10 national policy initiatives,

ranging from foster care to family financial security within the Pew Health Group

5 Time period covered by the review.

We did not set a limit on the time period for the reviews Given the fairly recent enactment of the MBI program we decided to consider all possible studies of its effectiveness regardless of when they were published

6 Results

To the extent possible, quantitative findings were grouped for review,

followed by more qualitative findings

I Quantitative Findings: Earnings

Overall, enrollment in the MBI program appears to result in

increased earnings for participants This is supported by multi-state

evidence, as well as several individual state evaluations Analysis of SSA earnings data by Mathematica Policy Research, Inc (MPR) shows that,

nationwide, an average of 40 percent of participants increased their wages upon enrollment in the MBI program and the median, inflation-adjusted

increase from earnings in the year pre-enrollment, to earnings in the year post-enrollment was $2,582.vi MBI enrollment is more strongly associated with increased earnings in some states than in others For instance, 58

percent of MBI participants in Nebraska increased earnings post-enrollment,

as compared to a low of 20 percent of New Mexico’s enrollees The full

analysis of MBI participant earnings increases, across states, is below

Table 1- Earnings increases as a Result of MBI participation (Mathematica Policy

Research)

Liu and Weathers, the authors of the MPR brief that included this analysis, hypothesize that individual state economies may play a small role, but that state program design factors are more influential Using the two extreme states above as examples, Nebraska requires MBI participants to work

continuously in order to maintain their enrollment in the program The state allows no “grace periods” New Mexico, however, does not require those MBIparticipants who are SSDI beneficiaries to work for two years (the duration oftheir time spent on the Medicare eligibility waiting list) As a result,

Nebraska’s MBI will attract and retain individuals who are having more

success in the employment market

Several state evaluations present earnings data, although direct comparisonsbetween these earnings outcomes are difficult States conducted their

evaluations in different years—the disparate economies and minimum wage policies in states, as well as national economic trends, compromise the

external validity of the outcomes Also, as mentioned above, the design features of each state program will influence the average earnings of MBI participants in that state For example, eligibility guidelines in some states allow individuals with higher incomes to participate in the MBI program, thus attracting these individuals to participate in the program and elevating the average earnings of participants

Yet, even with the varying contexts of each state evaluation, all but two of the state evaluations reviewed affirm that MBI programs are helping

participants to earn more The two states with less conclusive findings (Iowa and Wisconsin, also listed below) have somewhat lax work requirements, which likely attracted participants with more challenges to employment, and lower frequencies fo participants working and earning more Results of

relevant state evaluations are reviewed below:

Earnings: Average earned income of participants in 2009 was

$160.96 per month, a 3.9 percent decrease from the 2008 figure of

$167.43 Median earnings are $30 per month

Notes: These averages are skewed because of the high percentage

of Iowa’s MBI participants that were not working during the state’s evaluative period In contrast, MPR’s state-by-state analysis that

excluded participants with no income showed Iowa residents earning

an average of approximately $4,800 in 2006 ($400/month on average)

Kansas

Earnings: A continuously enrolled cohort increased their federal

adjusted gross income from $6,138 in 2003 (pre-enrollment) to $7,699

on average in 2007 Participants increased their average hourly wages from $6.94 in 2004 to $7.69 in 2007 (figures not adjusted for inflation)

Notes: More participants reported increased wages over time While

12.8 percent of participants reported an increase in hourly wages from

2004 to 2005, that number grew to 26.6 percent from 2006 to 2007

Massachusetts

Earnings: The state evaluation cited Mathematica Policy Research

Inc.’s national analysis of earnings for their state in citing that time participant earnings increased from an average of $10,846 in

first-2001 to $12,151 in 2002 (figures are adjusted for inflation).vii

Michigan

Earnings: Average monthly earnings increased from $528.80 in the

year before enrollment in 2005 to $616.83 in the year following

enrollment

Nebraska

Earnings: While comparison figures are not available, a total of 30

percent earned between $5,000 and $10,000 on average in 2005 33 percent of current participants earned less than $2,500 on average

Notes: Results are non-scientific, as fewer than 100 surveys were

conducted Also, Nebraska surveyed former MBI participants and their earnings clustered in the $5,000 to $10,000 range

New Hampshire

Earnings: From February, 2001 to June, 2005, participants earned an

average of $481.50 per month, compared to a similar group of

nonparticipating Medicaid beneficiaries, who earned an average of $33per month The average pre- and post-enrollment increase in earnings was 82.3 percent over the duration of the observed time frame

Notes: Most of the pre- and post-enrollment increase in earnings is a

result of participants obtaining employment upon enrollment

However, the 45 percent of participants already employed also

increased their earnings by an average of 10 percent, post-enrollment

Washington State

Earnings: Participants with prior Medicaid coverage earned 39

percent more than those in a matched control group of

nonparticipants: $7,126 versus $5,136 on average in the year followingenrollment

Notes: The results for participants without a prior history with

Medicaid are even more significant Those participants earned 136 percent more than the matched control group ($9,129 versus $3,860

on average)

Wisconsin

Earnings: In 2008, average participant earnings were $167 per

month This represents a decrease from 2007, when participants

earned $185 per month The median level of earnings is $36 and 68 percent of participants earned less than $100

Notes: These averages are skewed because of the high percentage of

Wisconsin’s MBI participants that were not working during the state’s evaluative period In contrast, MPR’s state-by-state analysis that

excluded participants with no income showed Wisconsin residents earning an average of almost $4,727 in 2006 ($400/month on

average)

Some state-level evaluations have difficulty establishing a strong association between enrollment in the MBI program and increased earnings due to the lack of efficient data systems and a resulting difficulty in tracking earnings ofthis population Many state evaluations depend on participants self-reportingtheir income via surveys Although this method is helpful for capturing the earnings of the self-employed—a group often excluded from FICA (which stands for the Federal Insurance Contributions Act) records and the SSA Master Earnings File—it is not as reliable as purely administrative data and can muddy the analysis of the true impact of MBI enrollment on earnings

For instance, different data collection systems show varying results in

Wisconsin The state’s income data tracking system, CARES, shows that longer enrollment in that state’s MBI program is correlated with increased income However, self-reported income data—while purporting higher

income levels than CARES—does not show the same correlation.viii Therefore,

in Wisconsin, it is less clear whether MBI program participation is correlated with increased earnings

In Kansas, the state attempted to resolve this discrepancy between reported income and SSA records by collecting surveys with self-reported income, and by also following a cohort of 254 continuously enrolled

self-participants from 2003 through 2007.ix Evaluators then worked with the state’s Department of Revenue to augment that cohort’s self-reported

income to their FICA-system income

Increased earnings are significant given participants’ historically low earnings levels Before enrollment in the MBI program, national

participant earnings were relatively low, averaging $4,844 This earnings level equates to an individual earning the federal minimum wage of $5.15 and working less than half time (in 2006, the time of the study) For those participants who earned income post-enrollment, and as referenced earlier, the MBI program resulted in median increased earnings of $2,582.x This is a significant income boost for individuals accustomed to earning so little Afterenrollment, the average income of wage-earning participants remains low at

$8,237 However, the impact of the MBI program on this population’s

earnings an increase of almost 50 percent is considerable. xi

Although the national average wages of those participants with earned

income is $8,237, there is a wide range of average earnings levels across states Mean earned income ranges from a low of $4,727 in Wisconsin to a high of $17,780 in South Carolina.xii (The high wages for South Carolina may seem paradoxical given the historically lower wages earned in the Southern states, but the reasons for this are, again, related to the design of the MBI program and not the economy of the state The influence of programmatic design on aggregate participant employment and earnings outcomes is described in further detail below.)

The parameters of the Social Security Disability Insurance (SSDI) and

Supplemental Security Income (SSI) programs have moderated the impact ofthe MBI program There are key differences in these two programs,

beginning with eligibility determinations Regarding SSDI, if a person is deemed disabled and has contributed to the Federal Contributions Act fund (FICA) via deductions from their payroll (or their spouse’s or parents’ payroll),

he or she is eligible to receive monthly SSDI payments Income and assets

do not factor into SSDI eligibility determinations The amount of the monthlySSDI payment is based on how much an individual (or his or her relative) hascontributed over his or her lifetime to this social insurance program, and is capped at a certain amount After a 24-month waiting period, SSDI

recipients become eligible for Medicare

SSI recipients, in contrast, must have limited income and assets The Federal Benefit Rate, or FBR determines monthly payment amounts and, in 2010, theFBR is $674 for a qualified individual and $1,011 for a qualified couple An individual or household’s countable income is subtracted from the FBR to

determine monthly payment amounts Some states do supplement this federal standard SSI recipients are automatically eligible for Medicaid Some individuals are “dual eligibles” and receive both SSDI and SSI

payments via a coordinated process These persons have both contributed

to the SSDI system, and meet SSI’s income and asset limits “Dual eligibles”automatically receive Medicaid and then, if still determined disabled 24 months later, switch to Medicare

The SSDI and SSI programs play a significant role in states’ MBI programs because, nationwide, seventy-five percent of MBI participants continue to receive SSI or SSDI cash benefits and a condition of eligibility to receive these benefits is making less than the SSA’s Substantial Gainful Activity threshold ($12,000 annually in 2010).xiii The approval process for SSI/SSDI cash benefits is lengthy, arduous and problematic for encouraging work; beneficiaries are only deemed eligible if it is proven that they cannot

currently work, either in their previous employment or in a new work

situation, and that their disabilities are expected to last at least one year or result in death Once deemed eligible, persons with disabilities receive a cash benefit each month as long as their earnings do not exceed the SGA limit There is a difference between the two programs in this regard: SSI beneficiaries who return to work see their cash benefits decrease gradually

as their earnings increase; however, SSDI beneficiaries who earn even one dollar above the limit lose their entire cash benefit Almost all state and national evaluations that analyze earnings have observed that average

participant earnings sharply fall off at the SGA threshold In 2003, 70 percent

of all MBI participants nationally had earnings below the SGA level of that year ($800/month).xiv This phenomenon is referred to as the SGA “cash cliff.”

In other words, while the MBI program enables SSI/SSDI beneficiaries to return to work and maintain critical health coverage, this population—and particularly SSDI recipients is careful to keep their earnings below the SGA level so as not to jeopardize the cash benefits upon which they rely Becausethe definition of disability currently in federal law would be difficult to

change, work incentives programs such as the MBI have been introduced to support employment for people who can be determined to have a significant

disability, but for work, allowing states to disregard earned income or savings

in the eligibility determination process that would otherwise render a person ineligible for health care or other critical benefits

Perhaps not surprisingly, evaluations found that MBI participants still rely on SSI/SSDI cash benefits and other benefits and supports to supplement their earned income despite the fact that they are employed For example, in Wisconsin, approximately half of all participants’ income is from SSI or SSDI.xv

While an important income support for persons with disabilities, this

dependence on disability benefits has negative repercussions on earned income levels: for every $1 received as a disability cash benefit, MBI

participants decrease their earnings from work anywhere between $.80 and

$1.09.xvi

Program structure influences earnings (and employment) profiles of state programs Again, MBI programs can impact participant employment

and earnings averages by setting eligibility parameters that attract

participants likely to work and earn more, or by helping participants—once enrolled—to increase their earnings The reviewed studies and evaluations found that the eligibility standard most associated with participants’ high earnings and work habits is the establishment of a high income “floor” or income “ceiling.” Once enrolled, the program features most associated with high earnings are setting short grace periods, and instituting policies of

employment verification.xvii

Similar to many other social assistance programs, including SSI and SSDI, income and asset limits affect how influential MBI programs can be with theirimpact on earnings Two relatively simple policies are associated with higherparticipant earnings: setting high income ceilings and/or high income floors Income ceilings cap eligibility at a certain earnings level If this threshold is set at a high level—or, if no ceiling is established, as is the case in

Massachusetts—a state’s MBI program will attract participants with higher earnings

Income floors, or earning eligibility requirements, refer to policies that

restrict eligibility to those participants who earn above a certain dollar

amount in wages In other words, it is not enough for participants to work, they must work and earn above an established threshold In South Carolina, the state established an income floor of $810 a month (in 2005); if a

prospective MBI participant had earnings below this level, the state

encouraged them to access Medicaid by applying for SSI Setting this

income floor is, however, against regulations established by the Center for Medicare and Medicaid Studies, which are intended to encourage any level ofemployment for persons with disabilities Yet some states (South Carolina, along with New Mexico and Oregon) set one anyway and, as a result, the average earnings of MBI participants in these states are relatively high

Massachusetts is in the unique position of having implemented a Medicaid buy-in program in 1997, prior to the issuance of national CMS guidelines, andthat state set a work requirement of 40 hours per month for participants This work requirement currently equates to an earnings minimum of $320 per month, based on that state’s minimum wage of $8.00 per hour.xviii

Because it preceded CMS regulations, Massachusetts’ income floor is not only recognized by the regulatory agency, CMS is leveraging the evaluative opportunity to examine how instituting an income requirement affects

participant employment behavior Like the other three states with income floors, Massachusetts’ participant earnings are some of the highest in the

country, and significantly higher than the average participant earnings in neighboring states.xix A recent study revealed a “clustering” of hours worked around the required monthly minimum, suggesting that participants

increased (or, in some cases, decreased) their hours worked to meet this eligibility parameter

Grace periods, or work stoppage protections, refer to the period of time that

an individual can remain enrolled in the MBI program without working for wages While the program is intended to serve those persons with

disabilities who are employed, the reality is that participants’ disabilities (and

a multitude of other challenges) make gaps in employment likely Nationally,

69 percent of all MBI participants were employed with earnings in 2006.xx The percentage of MBI participants reporting earnings varies dramatically across states due to differences in these work requirement policies States with shorter grace periods (defined as between one and six months) have a higher percentage of participants employed and earning income. xxi 2006 data show that the mean earned income of MBI participants in Wisconsin, a state that allows lengthy grace periods, was $4,727, while South Carolina enrollees, participating in a program that allows no grace periods, earned an average of $17,780

Work verification refers to the measures that states take to ensure that

participants are working for wages In Washington State, it is not enough for participants to claim that they are working; the state’s MBI program requires that they show payroll taxes are deducted from their paycheck, or the

participant must present their current and valid self-employment forms.xxii In contrast, Wisconsin allows its work requirement to be satisfied with “in-kind employment”, unverified work for non-monetary payment or work where wages are not reported to the state or federal tax system(s)

Individual participant characteristics also influence earnings

outcomes States can also try to attract participants with certain

demographic characteristics and experiences to their MBI programs

Specifically, younger participants, nonwhite participants, and those who havenot previously received Medicaid benefits are likely to earn more than the average MBI enrollee.xxiii The type of primary disability also appears to factorinto earnings outcomes

Of the top 10 percent of earners in 2004, 60 percent were aged 21 to 44, although this age group represents only 45 percent of all MBI participants.xxiv

Younger participants likely have higher earnings because they are likely to behealthier and so are able to work and earn more Certainly other factors influence the increased earnings of younger participants—for example, a greater facility with technology and the Internet may make home

employment a more viable option for younger persons with disabilities,

improving their employment outcomes Regardless of the reasons, age is

inversely correlated with earnings In other words, for every one-year

increase in age, the average MBI participant earns $91 less.xxv

Additionally, nonwhite earners are more likely to be among the top earners inthe MBI program Nonwhite participants make up only 20 percent of MBI enrollment, but 38 percent of the program's top earners.xxvi

State evaluations are beginning to reflect the differing earnings trajectories

of participants, based on their prior involvement with social support

programs Participants are more likely to earn more, and earn above the SGA threshold, if they have not previously been involved with the SSI and Medicaid programs For instance, Washington State created two groups of study participants for analysis purposes: one group that had previously

received Medicaid assistance, and a second that had not The two groups were rigorously matched on numerous factors, including level of disability, toguard against selection bias in the results While both study groups realized significant earnings increases upon MBI enrollment, the group that had not previously received Medicaid increased earnings at three times the rate of the other group.xxvii

Finally, primary disabilities also appear to affect earnings outcomes The most commonly reported disability is mental illness—nationally,

approximately one in three MBI participants has a mental illness, and severalstate evaluations report that mental illness is the most frequently reported primary disability.xxviii While this group’s earnings tend to be lower than otherMBI participants, participants with severe mental illness appear more likely

to earn wages (80 versus 69 percent), to increase those wages more rapidly (46 percent had higher earnings in the second year after enrollment, as compared to 35 percent of other participants), and to earn above the SGA level at a greater frequency (18 versus 16 percent) than the average MBI participant.xxix

Looking at other disabilities, enrollees with intellectual retardation and other developmental disabilities earn less than the average MBI participant;

however, they are the participants with the highest occurrence of

employment.xxx This is likely a result of the sheltered, or “workshop”

employment situations arranged for persons with intellectual and other

developmental disabilities In contrast, those with musculoskeletal

conditions work the least (along with those who have co-occurring

conditions), but tend to earn the most when they are employed.xxxi

Increased earnings have positive implications for state budgets

Some states have monetized the impact of the MBI program on other areas

of their state budgets In Washington, the state’s Office of Financial

Management estimates that six percent of participants’ increased earnings—

or $400,000 alone in the first year directly contribute to the general

fund.xxxii Kansas calculated that, between 2003 and 2006, MBI participants sharply increased the amount of state income taxes from an average of $74

in 2003 to $123 annually in 2006.xxxiii

States are also monetizing the MBI program’s impact in alternate ways In New Hampshire, that state’s evaluators calculated the aggregate earnings of its MBI participants as $20 million from 2002 to 2006, $11 million more than what would have been in the state’s economy without the MBI program.xxxiv Kansas responded to concerns that its MBI program was driving up the cost

of the Medicaid program with analysis showing that state medical

expenditures had decreased 45 percent per person between 2004 and 2007, and in Michigan, the state realized a 53 percent direct savings in reduced healthcare costs, a reduction in average costs per person from $947 to

$446.xxxv, xxxvi

Less directly, increased earnings and disposable income means a reduced demand for social service programs Participants are concerned about losingtheir SSI/SSDI benefits and thus they continue to rely upon those cash

benefits However, for those benefits with less rigorous application protocols (food stamps, for example), enrollees may reduce their reliance WashingtonState participants with prior Medicaid coverage reduced dependency on SNAP by $217 per month; those without prior Medicaid coverage reduced SNAP dependency by $300 per month While Washington State has

monetized this reduced dependency, few other states have followed suit Michigan notes that 40 percent of its MBI enrollees rely on SNAP or a housingsubsidy, but does not or cannot determine the impact that MBI has had, either on those participants or others that may have formerly used those income supports Also, Kansas frames the reduced dependence in terms of participant losses—the state found that 20 percent of its MBI enrollees have lost income-support benefits such as energy assistance as a result of

increased income

Involvement with SSI work incentive programs, such as Ticket to Work and the Trial Work Period, are associated with increased

earnings States with more enrollees utilizing various work incentive

programs also had more participants earning above the SGA While 39

percent of participants with no participation in SSI work incentive programs (i.e., 1619(a) and (b)) experience an earnings increase, that figure rises to 57percent for participants enrolled in both of these work incentive

programs.xxxvii Unfortunately, MBI enrollees cross utilize these programs at low frequencies - only 23 percent of MBI participants are enrolled in any one

of the four other programs.xxxviii

Income limits of state MBI programs are associated with participant use of other work incentive programs For example, participants in Nebraska are thebiggest users of work incentive programs, likely because the state has no

unearned income limit, suggesting that when participants have no

programmatic constraints to their income, they take advantage of the

supports available to them to earn more In contrast, those participants in New Mexico, Missouri, and Iowa use the programs the least because those states do not have, or do not enforce employment requirements.xxxix

II Quantitative Findings: Employment

Naturally, many of the findings that relate to increased earnings are also truefor employment and number of hours worked For example, the same designfeatures that are associated with increased participant earnings—short graceperiods, high income limits, and work verification policies—are also

associated with more hours worked.xl

MBI participants work, and work more than before enrollment or as compared to control groups Nationally, the average employment rate of

all MBI participants stood at 69 percent in 2006 and, while this is a decrease from 83 percent in 2001, this was due to the implementation of new state programs with more relaxed work requirements.xli The employment rates of MBI participants range from a low of 40 percent in Iowa, to a high of 100 percent in Rhode Island.xlii

Data from relevant state evaluations provides a more nuanced view of the impact on employment of the MBI program on participants:

Iowa

Employment: While 83.5 percent of participants work for pay, 39 percent of

those enrollees work between two and 10 hours per week (with an average

of seven hours) Employment outcomes have remained fairly steady

between 2004 and 2009

Kansas

Employment: The proportion of people with disabilities working an hourly

wage per week stayed the same between 2004 and 2007

Massachusetts

Employment: While there is no comparison group, state administrative

data reveal that participants worked an average of 91 hours per month (24 hours per week) from 2003 to 2006 A one-month (June 2004) snapshot of 6,190 participants reveal that 40 percent work between 40 and 79 hours per month

Michigan

Employment: Average hours worked per week increased from 17 hours

worked before enrollment to 20 hours post-enrollment, according to