The Reality of Work Requirements: Designed to Cut, Not to Put People to Work

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

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tl;dr

• Even as some Republicans push back on making $880 billion in Medicaid cuts from the federal budget, national work requirements for Medicaid eligibility seem to remain a point of consensus within the GOP.

• Regardless of how they are framed, work requirements are a cut to Medicaid — undermining a program that has historically provided health coverage based on need, income, disability, age and other factors, not on compliance with reporting work activities to the federal government.

• Manatt Health estimates that anywhere from 5.3 million to 30.8 million Medicaid enrollees would lose coverage from imposed work requirements, depending on the way in which the mandate is ultimately structured.

• States that have tested work requirements are a cautionary tale: Medicaid work requirements don’t correlate with more people getting or keeping jobs. Instead, they trigger large-scale Medicaid terminations, primarily for procedural reasons, leaving people without access to the care they need to work.

The 80 Million Impact

Congressional Republicans seem poised to impose a national, statutory Medicaid work requirement through budget reconciliation. Lawmakers are exploring what such a mandate might look like, drawing on the Limit, Save Grow Act of 2023 and more recent legislative proposals being advanced by Congressional Republicans (e.g., H.R. 1059, S. 447, H.R. 1452) as potential blueprints. The precise way in which such a policy would be structured remains unclear, including the populations that would be subject to the requirement and the level of flexibility that states would have to implement it.

Modeling the Fiscal and Coverage Impacts of a Work Requirement Mandate in Medicaid

Drawing on Manatt Health’s 50-State Medicaid Financing Model and a toolkit that we recently prepared for states in partnership with the Robert Wood Johnson Foundation funded State Health Value Strategies program, we explore what making work requirements a condition of Medicaid eligibility would mean nationally and for each of the 50 states and D.C. Since we do not yet know the exact parameters that would be established for the federal work requirements proposal if adopted, we estimate the impact of two different policy approaches, drawing on bills that have been introduced in Congress: one that requires all adults ages 18 to 65 eligible through non-disability pathways to comply with work requirements, and another that applies work requirements to adults 19 to 55 in the Medicaid expansion adult group only. For each policy approach, we model three potential state responses based on the degree to which a state can automate data matching to identify individuals complying with or exempt from work requirements. We selected these scenarios because previous and current state experiences with work requirements make one thing very clear: the less able states are to automate implementation of work requirements the more people have their coverage terminated.

Manatt Health estimates that anywhere from 5.3 million to 30.8 million Medicaid enrollees would lose coverage, depending on the way in which the mandate is ultimately structured.¹ This wide range reflects just how much variation is possible — and how critical what Congress ultimately puts forward will be to coverage termination consequences.

Under policy approach 1, if Congress applies work reporting requirements to all adults ages 18 to 65 eligible through non-disability pathways (impacting all states and D.C.):

Under policy approach 2, if Congress applies work reporting requirements to adults ages 19 to 55 in the Medicaid expansion adult group only (impacting 40 states and D.C.)":

These impact estimates make clear that the coverage termination consequences of mandating a work requirement are staggering. And, the more people the mandate applies to, and the less states are able (or permitted) to automate determination of exemptions from and compliance with the requirement, the worse the coverage losses will be. But we already knew that: State experiences with work requirements have demonstrated that coverage losses will be significant. Here’s what we know about the implications of work reporting requirements based on the experiences of states that have implemented them in Medicaid:

• Work Requirements Result in Substantial Coverage Losses. Even with more moderate work requirement policies (that apply to more limited populations and allow robust exemptions) that are implemented through highly automated data systems, work requirements lead to significant losses of coverage. In New Hampshire, for example, the state suspended its semi-automated work requirements program after just one month of implementation due to low compliance rates and high rates of anticipated coverage loss.

•  Work Requirements are Costly to Implement. Georgia, which relies on minimal data matching in administering its existing work requirements eligibility condition, has spent more in administrative costs than on medical care for people subject to work reporting rules. Even when states use automated data matching to reduce the administrative burden of reporting work activities, implementation remains costly.⁵ States must train and deploy staff, educate members, verify work activities, process exemptions, manage appeals, and track compliance—requiring IT systems changes, expanded staff, and sustained administrative oversight.

• People Subject to Work Requirements Are Already Working. Most people on Medicaid who can work already do. Rather than encouraging self-sufficiency, work requirements create new bureaucratic hurdles that make it harder to navigate Medicaid rules and stay covered. State implementation experiences have shown that high levels of coverage losses are primarily due to red tape (particularly when automation is limited), such as confusing paperwork, burdensome documentation processes, and reporting failures.

• Work Requirements Don’t Put People to Work. The Congressional Budget Office (CBO) and other sources have found that Medicaid work reporting requirements do not increase employment. Medicaid programs generally cannot fund work supports — meaning this policy does little to connect people to work. In fact, work requirements undermine access to the very care that helps people stay healthy enough to work.⁶

The Bottom Line

Conditioning Medicaid eligibility on compliance with work requirements would be a fundamental shift in the program’s purpose — transforming it from a guarantee of health coverage and access to health care for low-income individuals into a conditional benefit tied to new government reporting rules. The evidence is clear: work requirements do not promote employment; rather, they lead to substantial coverage losses, high administrative costs, and reduced access to care.

[1] All expenditure estimates below represent total Medicaid funds (i.e., federal and non-federal funds). Estimates do not account for interactive effects, meaning we consider the impact of work requirements on expenditures and enrollment independently of other proposals. Estimates may not sum due to rounding.

[2] Under Option A here and below, we assume that approximately 90% of enrollees subject to work requirements will ultimately lose coverage, largely due to challenges with reporting rather than because they are not in compliance with the requirement.

[3] Under Option B here and below, we assume that 50% of individuals subject to work requirements will automatically be determined exempt or compliant; of those not automatically determined exempt/compliant, we assume that around 80% will lose coverage, again largely due to reporting challenges. 

[4] Under Option C here and below, we assume that 60% of individuals will be automatically determined exempt or compliant; of those not automatically determined exempt/compliant, we assume that around 70% will lose coverage, largely due to reporting challenges.

[5] Despite efforts to minimize administrative complexity in Arkansas, administering work requirements for 115,000 people was estimated to cost over $26 million, of which 17% was paid by the state and 83% by the federal government. Despite use of data matching processes in New Hampshire, the GAO estimated that administering work requirements for just 50,000 people would have cost the state over $6 million, with 21% of the cost paid by the state and 79% by the federal government.

[6] Analyses on Medicaid expansion in Ohio, Michigan, and Montana show that access to coverage promotes enrollees in finding and maintaining employment.

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