A conservative critique of the Affordable Care Act’s (ACA’s) expansion of Medicaid eligibility is that it helps adults who are “able-bodied” and may discourage them from working. For example, a policy summary released by House Republicans proposes that “Obamacare’s Medicaid expansion for able-bodied adults [should] be repealed in its current form” (emphasis added). Arkansas Governor Asa Hutchinson has declared that if people are not willing to work and are “able-bodied, they ought to be kicked off the system.” In fact, the great majority of adults covered by the Medicaid expansion are in ill health or are already working, in school, or looking for work.
This false understanding of Medicaid recipients and their health insurance options has already influenced policymaking at the state level. For example, Arizona plans to seek a Medicaid waiver to limit able-bodied adults to a maximum of five years lifetime coverage and impose work requirements during that period. Similar waiver proposals have been consistently rejected in the past because they are contrary to the statutory objectives of Medicaid, which has never imposed lifetime limits or work requirements. But there is a risk that such a waiver might be approved in today’s policy environment.
These policy ideas stem from a serious misunderstanding about Medicaid recipients and a flawed belief that employment effectively assures health insurance coverage. In reality, only a small share of the adults covered by Medicaid expansions are in good health but not working, in school, or looking for work. Moreover, the types of low-wage jobs available to Medicaid enrollees are unlikely to offer meaningful health insurance coverage.
Health and Work Status of Medicaid Expansion Adults
Data from the 2015 National Health Interview Survey illustrate that most healthy Medicaid expansion beneficiaries are working or pursuing economic opportunities. Half (48 percent) of adults covered by the Medicaid expansion are permanently disabled, have serious physical or mental limitations—-caused by conditions like cancer, stroke, heart disease, cognitive or mental health disorders, arthritis, pregnancy, or diabetes—-or are in fair or poor health. Low-wage jobs are often physically demanding, precluding those with limitations from employment. Of the other half, who might be viewed as “able-bodied,” 62 percent are already working or in school and 12 percent are looking for work; only 25 percent are not currently working or in school. (More information about the analyses is at the end of this brief.)
Only 13 percent of adults covered by Medicaid’s expansion are able-bodied and not working, in school, or seeking work. Of that small group, three-quarters report they are not working in order to care for family members and the rest report other reasons, like being laid off. A much higher share of overall American adults are unemployed or not in the labor force (28 percent), according to 2015 Census data. Medicaid expansion enrollees are more likely to be working or looking for work than the general public, unless they are burdened by ill health or the needs of their families. Moreover, Medicaid expansions could make it easier for beneficiaries to find work, as reported in Ohio.
Insurance Availability in Low-wage Jobs
Low-wage workers are often not offered health insurance at work or are offered plans that are too expensive or too skimpy. Most of the low-wage jobs that Medicaid recipients could obtain do not provide health insurance. Only 28 percent of employees of private firms with low average wages (e.g., retail, food service, agriculture) get health insurance through their jobs. Almost half of employees (42 percent) of these firms are not even eligible for job-based health insurance, according to the 2014 Medical Expenditure Panel Survey.
These figures are not surprising. Even when low-wage businesses offer insurance, workers are often ineligible because they work part-time or have not been on the job long enough to be eligible. When job-based insurance is available, the monthly premiums are frequently too high to be affordable or have such high deductibles (e.g., health savings account-compatible plans) that they do not offer meaningful access to care for those with limited means. Medicaid can fill in these gaps by complementing job-based coverage by acting as a third-party payer, helping with expenses not paid by private insurance.
The Affordable Care Act helps low-wage workers transition from public to private coverage as their job opportunities expand and incomes rise. When earnings rise above the Medicaid income eligibility level, workers can use advance premium tax credits and cost-sharing reductions to afford private insurance in health insurance marketplaces. Conservative proposals could short-circuit this system and eliminate health insurance for millions of working-class Americans. The recent House ACA replacement proposal not only threatens Medicaid expansions, it would substitute flat tax credits that would render insurance less affordable for those with limited means.
This discussion has focused on the adults in the 32 states that expanded Medicaid. A critical gap exists for those who live in the remaining 19 states that did not expand Medicaid; tax credits are not available to those with incomes below the poverty line. Without Medicaid or income-adjusted tax credits, health insurance is simply too expensive for these individuals.
A particularly punitive policy is Arizona’s proposal for a waiver to impose a five-year lifetime limit on Medicaid eligibility for able-bodied adults. A basic fact of human life is that medical needs escalate with age. If there were lifetime limits, many would use up their Medicaid coverage in their twenties or thirties—-when they have lower earning capability and higher expenses of caring for young families—-and be unable to obtain health insurance in their forties or fifties, when they are more prone to diseases like diabetes, heart disease, or breast cancer. This could have serious effects on the health of low-income Americans and substantially increase burdens of uncompensated care for health providers.
Since its origins more than 50 years ago, Medicaid has not imposed work requirements or time limits. Medicaid expansions are associated with better insurance coverage and health access and lower mortality. Most individuals covered by Medicaid expansions are in poor health or working or in school or looking for work. The small numbers who are not working are usually caring for family members. Changes to the foundational elements of health policy could result in worse health for impoverished Americans.
Public use files of the 2015 National Health Interview Survey do not identify state of residence, nor the precise reason for Medicaid eligibility. For this analysis we defined Medicaid expansion adults as those below 65 who are parents with incomes from 75 to 138 percent of poverty or childless adults with incomes below 138 percent of poverty. Permanent disability was defined by receipt of Supplemental Security Income or Social Security disability benefits. Work status is based on employment in the past week.