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JAMA Forum Archive, 2012-2019: Health policy commentary from leaders in the field
JAMA Forum

The Problem With Work Requirements for Medicaid

In November, the Trump administration announced that it would be more open to proposals from states that impose work requirements for Medicaid. In other words, it would allow states to apply restrictions on “able-bodied” adults who might apply for the program. This is an abrupt change from the Obama administration, which supported Medicaid eligibility by income levels, regardless of whether people had jobs or not.

Image: CasPRO/Thinkstock

This new move rests on the premise that many who are eligible for Medicaid could get insurance through work, but choose not to be employed. Most who support this change believe that requiring those who can work, to work, will help lift people out of poverty and grow the economy.

At least 10 states have submitted waivers to allow them to require work—or at least a proven effort to find work—for some beneficiaries.

At first glance, such a requirement seems reasonable. After all, if there’s no reason for an able-bodied adult not to work, then it’s possible that setting some requirements might nudge some of them to improve their lives. Given the high cost of programs like Medicaid, it also seems reasonable to make cuts on those people who are the most able to make do without it. If we dig deeper, though, it’s apparent that such a move is less likely to make a difference than many might think.

A Kaiser Family Foundation analysis from spring of 2017 found that almost 80% of adults in Medicaid are from working families. Almost 60% are working themselves, and this is without any work requirements at all. Unfortunately, many in the United States, even if employed, have wages so low that they still qualify for Medicaid because they earn less than 138% of the poverty line. That is, of course, if those states accepted the Medicaid expansion. In states that didn’t, many adults who work can’t afford insurance.

Disability and Illness

Of those who don’t work, about 35% are unable to work because of disability or illness. Another 28% are taking care of other members of their families in lieu of jobs. Of those that remain, 18% are students, 8% are looking for work but can’t find it, and 8% are retired. That leaves about 3% of the nonworking adult Medicaid population who we could, possibly, define as “able-bodied” yet choosing not to work.

Another analysis, using data from the 2015 National Health Interview Survey, found that half of those covered by the Medicaid expansion are permanently disabled, have serious physical or mental limitations, or are in fair or poor health. Of the other half, 62% were working or students and 12% were looking for work. The rest, or about 13% of all covered by the expansion, might qualify as able-bodied and unemployed.

A more recent study, published in JAMA Internal Medicine in December 2017, focused on Michigan and surveyed more than 4000 people already enrolled in Medicaid for at least a year. About half of respondents reported that they were employed in some way.

Another 4.5% were stay-at-home mothers or fathers, 5.2% were students, and 2.5% were retired. More than 11% were unable to work. This left 27.6% who were “out of work.” Out-of-work adults were more likely to be older (aged 51 to 64 years), more likely to be in fair or poor health, have a chronic mental health condition, or a physical or mental functional limitation.

It’s possible that some who report being unable to work might be caught up in new work requirements and lose their coverage. That would be a tragedy, because having a disability or illness likely leaves individuals especially vulnerable to deteriorations in health.

Even those who are not defined as “unable to work,” but who are unemployed, are at risk, though. It’s these people who will most likely be affected by new regulations. Chronic medical conditions, functional limitations, and advanced age make it more difficult to find work, even if one is trying to do so. Penalizing people with these issues further by limiting or pulling their Medicaid coverage will not improve their lives or make it more likely that they will find employment.

What Are the Costs?

The true number of healthy, able-bodied adults who could work but choose not to is small. Given that, it’s worth considering the costs to administer programs such as these. They aren’t cheap, nor are they easy. Forcing those who have jobs to prove that they are employed adds an extra layer of administrative burden that could cause eligible people to lose their coverage if they don’t comply with more regulations. Confirming that unemployed adults meet qualifications for not working, perhaps due to disability or illness, will require states to invest in compliance personnel and procedures that will raise the cost of the program itself. They will further need to follow beneficiaries who are trying to find work, but unable to land a job. That will not be straightforward either.

Any change in policy should be grounded in evidence and thoughtful in implementation. The closest we have is our experience in placing work requirements onto the Temporary Assistance for Needy Families (TANF) program, which involves federal block grant funds for states to help low-income parents and children. As with Medicaid, people receiving TANF largely worked even without requirements. Those who didn’t work often couldn’t. The new requirements didn’t lead to significant increases in employment or reduce poverty. They also cost a lot to implement.

At this time, it’s not clear whether creating new work requirements would yield large savings, given how few beneficiaries qualify as “able bodied” and unemployed. It’s not clear how many deserving beneficiaries might lose coverage and suffer losses because of complexities in the program. It’s not clear how much it would cost to implement such a program and whether that cost might exceed the savings. It’s not even clear whether this program would achieve even the most basic rationale of incentivizing more able-bodied beneficiaries to work.

Given that, it’s not clear why so many states are eager to rush to implement work requirements for Medicaid recipients without having answers for these questions.

About the author: Aaron E. Carroll is a professor of pediatrics at Indiana University School of Medicine who blogs on health research and policy at The Incidental Economist, makes videos at Healthcare Triage, and tweets on Twitter at @aaronecarroll. (Image: Ted Grudzinski/AMA)