While the American Health Care Act (AHCA) has collapsed, adding work requirements to Medicaid continues as a key theme in conservative health reform efforts. Department of Health and Human Services Secretary Tom Price and Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma sent a letter to state governors offering greater flexibility in approving Medicaid Section 1115 waivers, including those with work-related proposals. Four states, Indiana, Arizona, Kentucky, and Pennsylvania, have submitted waivers to CMS to add work requirements to Medicaid. To date, none have been approved. Kentucky’s application is still pending and Indiana’s latest waiver renewal request does not include a work requirement. In his rejection of a Medicaid expansion bill that was passed overwhelmingly by the Kansas legislature, Governor Sam Brownback wrote: “I am vetoing this expansion of ObamaCare because it fails to serve the truly vulnerable before the able-bodied, lacks work requirements to help able-bodied Kansans escape poverty, and burdens the state budget with unrestrainable entitlement costs.” As we discussed in an earlier Health Affairs Blog post, concerns that the Affordable Care Act’s (ACA’s) Medicaid expansion discourages work run contrary to the fact that 87 percent of adults covered by the Medicaid expansion are already either working, in school, or looking for work. This update describes the people who could be affected by the Medicaid work-requirement provision as drafted in the AHCA, which applied to both traditional and expansion populations.

An amendment to AHCA would have let states require that adults ages 19 to 64 either work or take part in an approved job search or training program to receive Medicaid coverage. Exemptions could be made for those who are permanently disabled, pregnant, the sole parent of a child younger than age six or a disabled child, or, under certain conditions, 19 years old and still in school. While the AHCA was withdrawn before a US House vote, the bill may be revived, and at the very least, the proposal outlines possible parameters of Medicaid work requirements that may be allowed by the administration.

Which Beneficiaries Are At Risk?

We estimated the number and characteristics of adults likely to be subject to the work requirement using data from the 2015 National Health Interview Survey. Nationwide, about 22 million adults covered by Medicaid (58 percent of all adults on Medicaid) could be subject to the work requirement, as specified above. Fifty percent of the 22 million are already working, 14 percent (3 million) are looking for work, and 36 percent (8 million) are neither working nor looking for work. (Since the number of hours of work were not specified in the AHCA, we assumed that all workers would have met the requirement.)

About 11 million Medicaid enrollees, including those already looking for work, would be at risk of losing coverage if these requirements were imposed nationwide. This equals more people than the population of most US states and about 15 percent of the 74 million people using Medicaid. Some of those looking for work might count as fulfilling job search requirements, and some of the others might enroll in job training programs. Nevertheless, based on the history of work requirements in cash welfare, substantial coverage losses are likely.

Almost half (46 percent) of the 11 million enrollees at risk of losing coverage have serious health problems, even though our calculations excluded those on disability programs such as Supplemental Security Income (SSI) or Social Security Disability Insurance. These health problems include physical or mental limitations caused by illnesses such as diabetes, arthritis, cancer, heart disease, or mental illness (36 percent of the 11 million at risk) or being in self-reported fair or poor health (10 percent). Those who report fair or poor health have an elevated risk of death.

In addition, among the people at risk of losing Medicaid:

  • Almost two-thirds (63 percent) are women. This is contrary to the stereotype that the majority are idle men.
  • Slightly more than half are racial and ethnic minorities, while 44 percent are non-Hispanic whites.
  • Two-fifths (39 percent) are middle-aged (45 to 64) adults, who have a greater risk of serious medical problems.
  • About 30 percent lack a high school diploma, and another 30 percent have a high school degree or GED equivalency but no college. Those with limited education have sparse employment prospects, but the proposal effectively discourages further education, since college attendance does not exempt those older than age 19 from the work requirement.

When those who were not working or looking for work were asked why:

  • Nearly one-third (29 percent) said that they were caring for a family member.
  • Another third (33 percent) said that they could not work because of a disability, despite the fact that those receiving disability benefits were excluded from our analysis. Current disability programs exclude many with serious health problems because of overly rigid requirements. Getting a disability determination is difficult and time-consuming. For example, it typically takes about 90 days for a disability determination, not including the time required to gather relevant medical information. Applicants often need legal assistance to complete the process.
  • An additional 5 percent were not working due to a temporary health problem (for example, a broken leg or illness).
  • One-sixth (17 percent) were going to school.
  • Other reasons listed for not working included being laid off from work or being retired.

Consistent with their poor health, non-working Medicaid beneficiaries potentially subject to a work requirement need more health care than those who are working. The data indicate that they are three times as likely as working beneficiaries to have seen a mental health professional in the past year, twice as likely to have been hospitalized, and have 50 percent more doctor visits in a year. Those not working often have serious health needs, which could be jeopardized if they lose Medicaid coverage.

Implications Of Medicaid Work Requirements

After excluding those who would be exempt, 22 million Medicaid recipients might be required to complete work activities to maintain eligibility. Monitoring work activities and providing training or other programs could overwhelm state and federal resources. The Temporary Assistance for Needy Families (TANF) program, which has broad work requirements, served an average of 640,000 adults nationwide in 2016. The job counseling, search, and training system is already overtaxed, and adding an influx of millions of Medicaid beneficiaries would overwhelm the system. Moreover, President Donald Trump’s budget proposes to cut funding for job training.

Improving job skills and opportunities for low-income people is a worthy goal, but do mandatory work requirements even have a significant effect in making people more independent? Labor economist Jared Bernstein has noted that a substantial body of research indicates that “any increases in employment following the introduction of work requirements are small and short-lived, and that such requirements fail to improve low-income people’s employment prospects in the long run.” Voluntary job programs could help some get the skills needed to become more independent, without kicking people off the health insurance coverage they need.

A major justification for work requirements is to transition beneficiaries off government programs. But there may not be a viable pathway for large numbers of recipients to gain insurance without government support. As we described earlier, only about a quarter of those who work for firms in low-wage sectors receive health insurance through their job. The ACA offers income-graduated tax credits to people without employer-sponsored insurance and also helps people transition from Medicaid to subsidized private insurance in the health insurance Marketplaces as their earnings improve. As others noted, the AHCA draft bill would have substituted flat tax credits that would make health insurance less affordable for the low income, one of the reasons why the Congressional Budget Office analysis projected large losses of individual insurance coverage.

Although more than half of Medicaid adult recipients work, our analysis shows that a substantial population, primarily women and those with low education levels, would be at risk of losing health coverage if mandatory work requirements were added. Many of those who might lose insurance have substantial health needs. Work requirements might pressure a small number to gain work on a temporary basis, but is it worth the trade off of causing millions to lose their health insurance coverage?

Methodology

We used the 2015 National Health Interview Survey to identify Medicaid recipients ages 18 to 64 who might be subject to a work requirement. We considered those receiving SSI or Social Security Disability Insurance because of a disability to be exempt due to that disability, those receiving aid from the Special Supplemental Nutrition Program for Women, Infants, and Children to be exempt as caretakers of children younger than age six, and those who are pregnant to be exempt due to that pregnancy. Work status is based on employment in the past week.