Medicaid Work Requirements in Nine States Could Cause 600,000 to 800,000 Adults to Lose Medicaid Coverage
Work requirements for Medicaid beneficiaries have been approved by the U.S. Department of Health and Human Services (HHS) in nine states — with others pending approval or under review. If these projects are fully implemented, we estimate that approximately 589,000 to 811,000 people would lose their Medicaid coverage after 12 months. This amounts to about one-quarter to one-third of the 2.5 million people who would be subject to the new rules, and includes 128,000 to 184,000 just in Kentucky and Arkansas combined. These are losses only associated with the work requirements and do not account for other elements like monthly premiums or new paperwork requirements that may trigger additional losses.
Work requirement policies vary somewhat from state to state. Typically, adult beneficiaries who qualify under a Medicaid eligibility expansion must work at least 80 hours each month, be engaged in job search or volunteer work, or be exempt because of medically frailty, pregnancy, or parenthood. Those who do not comply lose Medicaid coverage, often after three months.
HHS has encouraged states to impose work requirements using Section 1115 demonstration projects to test the claim that they would improve health, employment, and incomes. In more than 50 years of prior policy, work has never been a condition of Medicaid eligibility. Medicaid was designed to insure eligible low-income children and adults without regard to employment status. Despite regulations requiring impact estimates as part of Section 1115 applications, HHS did not require states to estimate how the demonstrations would affect coverage.
Most adult Medicaid beneficiaries work or are limited in their ability to work because of health problems, schooling, child care, or other needs. Many who would lose Medicaid eligibility are working or trying to work, but are unable to comply with the rules because they face major barriers to steady employment or cannot navigate the procedural barriers.
To date, only Arkansas has actually terminated beneficiaries, around 18,000 adults, because of noncompliance prior to the court’s decision to halt the project. A recent survey found the losses occurred even though most of those targeted appeared to be working or exempt. Many lost their coverage in large measure because of confusion about the policies. One-third did not know about the requirements; only half of those who were eligible and needed to report work activities were doing so. Arkansas’ work requirements were not associated with increased employment.
States should have been aware of consequences of work requirements after seeing how they worked in the Supplemental Nutrition Assistance Program (SNAP, also known as food stamps). Seven of these nine states imposed work requirements for SNAP beneficiaries in the past few years. Within 12 months participation fell by 440,000.
Several rigorous studies found that SNAP work requirements reduce enrollment and have little to no employment benefits. One study found minor employment increases and much larger participation reductions. Another economic analysis found no significant employment growth, only caseload reductions. Research by a University of Chicago economist also found no employment improvements. Our preliminary analysis also found enrollment losses, which were more severe for African Americans, and that many people with serious health problems lost benefits. In another analysis, we estimated that work requirements led more than a third of able-bodied adults without dependents to lose SNAP benefits, about 600,000 people nationwide. These studies join a body of research about the damage caused by work requirements in Temporary Assistance for Needy Families and their failure to improve health or employment.
If more states impose work requirements, the total effect would be even larger than what we have estimated here. Seven more states have submitted applications and several more are planning proposals. Roughly half the states in the nation could potentially adopt Medicaid work requirements. Even if some people who lose coverage are able to reenroll later, coverage gaps will grow, potentially affecting health. This churning also drives up costs through higher administrative expenses and the greater costs of deferred care. The loss of Medicaid coverage also will shrink funding for health care, creating losses for safety-net hospitals and community health centers. Indeed, the loss of federal funding because of work requirements could lead to job losses, rather than increased employment. The evidence indicates that work requirements do not achieve their stated goals but cause substantial coverage loss and potential adverse health effects instead.