Medicaid Work Requirements: Dismantling Medicaid Expansion by Design

Editor: Amanda Eisenberg
Authors: Patti Boozang and Kaylee O’Connor

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tl;dr

• The House-passed budget bill (“House bill”) largely targets the Affordable Care Act (ACA) Medicaid expansion group and other expansion-like adults, including making a stringent work requirement a new condition of initial and ongoing Medicaid eligibility. The House bill also establishes an accelerated timeline for states to implement Medicaid work requirements by Dec. 31, 2026.

• The Congressional Budget Office (CBO) preliminarily estimates that the work requirements would generate $280 billion in federal savings from 2025 to 2034, driven by terminating people’s Medicaid coverage and access to health care. The latest CBO estimates do not take into account the accelerated implementation of work requirements and savings estimates are likely to increase when they do.

• Building on CBO’s estimate and accounting for experience in states that have implemented work requirements, Manatt projects even greater savings: $487  billion in federal funds (and $537 billion all funds —i.e., in federal and state Medicaid funds) over 10 years due to upward of five million people losing Medicaid coverage. Manatt’s estimates take the accelerated implementation date into account but will be updated to address other more stringent requirements of the House-passed bill and are expected to increase.

• Mass health coverage terminations for Medicaid expansion enrollees are inevitable, not because people aren’t working, but because exemptions and compliance are difficult to identify, manual processes are the status-quo, and reporting requirements will be hard for Medicaid enrollees to parse.

The 80 Million Impact

The House-passed budget bill (“House bill”) would require states, starting in Dec. 2026, to condition Medicaid eligibility on work requirement compliance for Medicaid expansion and expansion-like adults ages 19 to 64. It’s helpful to consider who these people are: they include low-wage workers without access to employer-sponsored insurance (ESI), individuals with chronic conditions such as substance use disorders or mental health conditions, parents with incomes too high for traditional Medicaid, people who become pregnant while enrolled, retirees and those with disabilities awaiting or forgoing a formal disability determination. The policy rational for the mandatory work requirement, articulated by GOP leaders, is summed up in House Speaker Johnson’s recent statement that “able-bodied workers, many of whom are refusing to work because they’re gaming the system,” is against the purpose of the program. Yet longstanding research indicates that most Medicaid-enrolled adults are working or taking care of a dependent; and new research shows that those most at risk of losing coverage are disproportionately middle-aged women with low incomes and limited education, many of whom have left the workforce to care for family members.

Let’s consider who else is at risk of having their coverage terminated. The bill requires states to exempt some people from the Medicaid work requirement, including pregnant people, those with disabilities and people with substance use or mental health conditions. But it offers no assurances that individuals who should qualify for an exemption will actually receive one. Hopefully, states will attempt to rely to the greatest extent they can on data they receive through the Medicaid application and their data matching to automatically exempt people. The reality is that many exemptions can’t be automatically verified using data. In these cases, states will default to manual, paperwork-based processes.

Manual processing will be amplified because of the accelerated implementation that the bill requires, leaving states insufficient time to build automation into their systems. To the extent large numbers of people subject to the work requirement have to manually demonstrate that they qualify for an exemption; coverage terminations will increase dramatically, including for eligible and high-need people who should be exempt.

Also at risk of being locked out of health coverage: People who are meeting the qualifying activities, but don’t work “enough” or can’t “prove it,” along with those who recently lost a job. To meet the work requirement, individuals must complete at least 80 hours of a work program, work, community service, part-time education, or a combination of these activities — or have a monthly income of at least $580 (the federal minimum wage multiplied by 80 hours). The bill’s 80-hour work requirement and monthly income threshold fail to account for the fact that many Medicaid enrollees work part-time or seasonal jobs with fluctuating hours and incomes, potentially leading to coverage losses among individuals who are actively working but cannot meet the rigid criteria. No allowances are made for missed shifts due to family or medical emergencies, reduced hours, or other last-minute scheduling changes.

Unlike prior state work requirement conditions (with the exception of Georgia), the House bill would make meeting the work requirement a condition of initial Medicaid enrollment as well as ongoing Medicaid eligibility. The House bill requires people to prove they have completed at least 80 hours of qualifying activities in the month before applying for Medicaid — and again for at least one month in every six-month period after enrollment. States would have the option to impose even stricter standards — like proof of work for multiple months before application or renewal, or more frequent compliance checks than every 6 months.

Verifying compliance with the work requirement creates yet another potential hurdle for Medicaid-eligible people in getting and keeping their health coverage. The bill calls on states to use available, reliable data (ex parte data) “where possible” — but provides no clear standard for when states must do so versus relying on manual documentation. As with exemption-related data, there are data issues that may prevent automated compliance verification. Even when data are available, they may be conflicting, incomplete, or outdated — like in the case of changes to work hours or caregiving responsibilities. And while many useful ex parte data sources exist in state systems (such as participation in an education/training program and Supplemental Nutrition Assistance Program (SNAP)/ Temporary Assistance for Needy Families (TANF) case information), they’re often not integrated with Medicaid eligibility systems. Integrating these sources will take time for states to implement — time which the bill does not allow. Even in the best case, many people will be forced to rely on manual reporting to the state, likely including providing documents as proof of compliance. This will be another point of coverage termination risk for people who are eligible for Medicaid, complying with work requirements, but unable to clear the manual red tape necessary to get or keep their health coverage.

The Bottom Line

The mandatory work requirement proposed in the House bill will result in termination of Medicaid coverage for millions of people, nearly all of whom reside in the 40 states that have expanded Medicaid. The design of the proposal and its projected impact on health coverage across the country is another means to an end of dismantling Medicaid expansion. The policy would block access to coverage and care at the exact moment people need it most. Consider a person who just lost their job turns to Medicaid for health coverage — only to find they must first prove they’re working, volunteering, or in an education program to enroll. Without coverage, they may delay needed health care, get sick, and fall even further from being able to find a new job. The House bill further blocks access to health coverage and care by stipulating that individuals who can’t prove they meet the work requirement are not only blocked from enrolling in or keeping their Medicaid coverage but also be barred from accessing subsidized Marketplace coverage. Taken together, these provisions virtually guarantee that millions of low-income adults will become uninsured starting in 2027.

Conditioning Medicaid on a work requirement is not a pathway to a job or a better job. States that have previously tested work requirements found no meaningful increase in employment. Those states have experienced large-scale terminations of Medicaid coverage, primarily for procedural reasons, leaving people without access to the health care they need to work.

In a recent New York Times op-ed, HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz claim that “welfare is no longer a lifeline to self-sufficiency but a lifelong trap of dependency.” Setting aside the fact that Medicaid is not welfare, but a health insurance coverage program for low-income families in a country that requires insurance to access health care, this assertion doesn’t hold up. Medicaid is not a barrier to work — it’s a foundation for it.

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