Medicaid work rules' bureaucratic nightmare

Why it matters: Coverage losses stemming from work rules will be a key focus in the Senate this month as lawmakers debate the sweeping GOP budget bill that contains the most significant changes to Medicaid in the program's history.

What's inside: The bill, which passed the House in May, includes a new federal requirement for those ages 19 to 64 to work or participate in 80 hours of community engagement per month to keep their Medicaid coverage.

• The requirement was supposed to take effect in 2029, but the House Freedom Caucus insisted the timeline be moved up to Dec. 31, 2026 — which would generate around $50 billion more in savings per year.
• Senate Republicans, even the more moderate members, have expressed support for the work requirements, including moving up the timeline.

The White House contends that 4.8 million able-bodied adults are choosing not to work and said this week that work requirements "will strengthen the system to better help those most in need of assistance."

• House GOP leadership this week also cited recent statistics from the American Enterprise Institute that state Medicaid recipients who don't report working say they spend 4.2 hours watching TV and playing video games (compared with 2.7 hours for recipients who work).

State of play: Most able-bodied Medicaid recipients work full or part time. Some states have already imposed work requirements, resulting in thousands of people either losing their coverage or finding it very difficult to sign up.

• Arkansas implemented a work requirement in 2018 that lasted less than a year and left 18,000 fewer people covered, or about 25% of the eligible population, per KFF. A court eventually ruled the program violated Medicaid law.
• Work requirements began in Georgia as part of a Medicaid expansion in June 2023, and as of January, only 6,500 adults had enrolled — a fraction of the 25,000 the state expected would sign up in the first year, KFF says.
• New Hampshire also tried to launch work requirements but stopped after a month, after only 8,000 of the 25,000 people subject to the requirement had complied.

The Congressional Budget Office this week estimated that 4.8 million people could become uninsured by 2034 due to the Medicaid work requirements measure in the reconciliation bill.

How it works: States would have to build systems to track all of the enrollees and their work statuses, likely adding significant costs to their program budgets.

• Then, enrollees would have to contact states, which could be required as often as once a month, to show that they're working or participating in another eligible activity like caretaking.
• Enrollees would have to submit paperwork proving a disability, substance abuse disorder or other criteria to qualify for an exemption.

One concern is that the envisioned system doesn't account for informal arrangements, such as whether a person is paid in cash for domestic work, seasonal jobs in agriculture or even being self-employed.

• It also assumes that covered people would be aware of the work requirements and would try to comply.

What they're saying: "The experience in Arkansas was that the people who lost coverage because of the work requirements for the most part became uninsured," said Jennifer Tolbert, deputy director of the Medicaid program at KFF. "There was no increase in the share of those working."

• "In all of these states, we see time and again that the people hurt include workers who are supposed to be exempt, including people with disabilities who are supposed to be exempt," said Leonardo Cuello, a research professor at the Georgetown University Center for Children and Families.

The bottom line: Work requirements don't appear to encourage people to work, and the large savings in the budget bill are likely to appear because of people losing their health coverage.

• "The argument is that this is about waste, fraud and abuse. That's not how this bill produces savings," said Ben Sommers, a health economist at Harvard who studies work requirements.
• "These are savings from kicking eligible people out of Medicaid who should have that coverage, who need it for their health care, because they can't navigate this big bureaucratic mess that the bill creates," he said.

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