Not ability modifiers, it needs to affect the underlying scores.

The background on this: house rule says that after going to 0 HP, you get a 10% penalty on all ability scores until you've taken a long rest. I don't see a way to apply a penalty across all abilities at once, so my thought was to do this with a magic item, and then just stow the item after a long rest. 

But when I create an item that applies -1 to all abilities, it doesn't seem to do anything when I use it/equip it, even though it looks like it should. 

What's the correct way to make this happen?

you could always add a negative to each ability score one by one. just add six modifiers.

You would need to add these to your magic item.

• Modifier: Bonus->Subtype: Strength Score->Fixed Value: -1
• Modifier: Bonus->Subtype: Dexterity Score->Fixed Value: -1
• Modifier: Bonus->Subtype: Constitution Score->Fixed Value: -1
• Modifier: Bonus->Subtype: Intelligence Score->Fixed Value: -1
• Modifier: Bonus->Subtype: Wisdom Score->Fixed Value: -1
• Modifier: Bonus->Subtype: Charisma Score->Fixed Value: -1

After adding those modifiers you must then re-save the entire magic item using the main [SAVE CHANGES] button under Basic Information.