Medicaid – a program designed to help pregnant women, the disabled, the elderly, and children – has become overrun with able-bodied, unemployed adults. Today, a plurality of Medicaid spending goes towards able-bodied adults, with 62 percent of them not working, seeking education/training, nor volunteering.
Not only does this push Medicaid spending into overdrive, but it depresses employment, subverts care away from those who need it most, and is an unpopular allocation of resources. With reconciliation legislation being written, lawmakers should take this opportunity to pass Medicaid work requirements.
While Medicaid programs are, largely, designed and administered by states, the programs are primarily financed by federal taxpayers and must follow certain federal guidelines. In some states, the federal government covers nearly 80 percent of its costs.
Most work requirement proposals simply require able-bodied adults under 60 to be working, volunteering, or training (even part time) to receive Medicaid benefits. While there are several ways to construct these parameters, it is clear something must be done. Right now, the Medicaid program is on an unsustainable track.
After Obamacare, Medicaid costs have been driven by able-bodied adults, particularly unemployed ones. Democrats, via the Affordable Care Act, expanded Medicaid eligibility to include any adult earning 138 percent of the federal poverty level (FPL) and below. Suddenly, in the 40 states (and DC) who have adopted Medicaid expansion, able-bodied adults of working age were eligible for a program designed to help the neediest among us.
As Nina Owcharenko Schaefer with the Heritage Foundation highlights, the enrollment of these able-bodied, working age recipients has rapidly outpaced enrollment of children, elderly people, and disabled people:
“Between 2013 and 2021, almost 20 million newly eligible able-bodied adults were added to Medicaid. During that same period, the number of children increased by 2.5 million, the number of elderly enrollees increased by 1.2 million, and the number of disabled enrollees declined by 400,000…This disproportionate increase in able-bodied adults suggests a serious misalignment of financial incentives—one that requires immediate correction.”
According to the Foundation for Government Accountability (FGA), 69 percent of the increased federal Medicaid costs since 2000 can be attributed to Obamacare enrollment increases. A plurality of Medicaid spending has now been diverted to able-bodied adults, with the breakdown as follows:
- 35.9% of spending on able-bodied adults
- 31.4% of spending on individuals with disabilities
- 19.9% of spending on seniors
- 12.8% of spending on children
In 2000, there were 6.9 million able-bodied adults on Medicaid. Today, there are 34 million of them. To make matters worse, most are not working. As FGA notes, “Across 23 states with responsive records, a whopping 62 percent of able-bodied adults on Medicaid had no earned income, meaning they were not working at all.”
Over a 10-year budget window, implementing work requirements on able-bodied adults under 60 without young children could save taxpayers $260 billion.
Work requirements increase labor participation. While states haven’t exactly been permitted to move forward with work requirements (Biden’s Center for Medicare and Medicaid Services (CMS) revoked 13 states’ Medicaid work requirement waivers), we do have a few examples of Medicaid’s relationship to employment.
An article in The Quarterly Journal of Economics details how, when Tennessee moved 170,000 able-bodied adults off of Medicaid coverage in 2005, labor force participation, private health insurance coverage, job searches, and, of course, employment, went up:
“Using both across- and within-state variation in exposure to the disenrollment, we estimate large increases in labor supply, primarily along the extensive margin. The increased employment is concentrated among individuals working at least 20 hours a week and receiving private, employer-provided health insurance. We explore the dynamic effects of the disenrollment and find an immediate increase in job search behavior and a steady rise in both employment and health insurance coverage following the disenrollment. Our results are consistent with a significant degree of “employment lock”—workers who are employed primarily to secure private health insurance coverage.”
As the aforementioned FGA notes, when Arkansas implemented work requirements for able-bodied adults in 2018, “more than 9,000 went to work, and more than 14,000 left the program due to higher incomes in just the few short months the requirement was in effect… by the end of 2018, Arkansas was on track to save taxpayers at least $300 million per year.”
The FGA report lists several testimonials from those who were unemployed, discovered they were subject to the Arkansas Medicaid work requirement, and decided to turn their lives around. Jeff Snyder, for example, was unemployed for more than nine months before discovering he had to find work. He quickly traveled to a workforce center and was matched to a job where he now makes twice the minimum wage in Arkansas. He expresses his gratitude here:
“I now work with a great company—in a job that I actually would not have gotten without the help from Department of Workforce Services. They have given me an opportunity to provide a better life for my family and I can’t and won’t be able to thank them enough.”
Work requirements help those who need Medicaid most: the elderly, pregnant women, disabled Americans, and children. Not only do able-bodied, unemployed adults create a superfluous strain on the Medicaid system, putting its ability to provide for those who need it (and its very existence) in jeopardy, but it also diverts care itself away from the most vulnerable.
Suzanne Blake of Newsweek reports that Medicaid patients have and will continue to lose their doctors. Only 65 percent of doctors said they would continue to take new Medicaid patients, with 8 percent reporting they would no longer accept them. In another survey, 14 percent of doctors report trying to limit their Medicaid patient counts. This will only get worse as reimbursement rates fail to keep up with inflation, another result of – you guessed it – ever-increasing financial strains on Medicaid (i.e. spending on able-bodied adults).
In this way, Medicaid recipients are competing for care, especially in areas without many healthcare providers. FGA reports that over 700,000 “individuals with developmental or intellectual disabilities or other conditions that require special care are languishing on Medicaid waiting lists.” Thousands of vulnerable recipients will not receive care because resources have been diverted away to those who, simply put, do not need it. Since the Obamacare expansion, just under 22,000 Medicaid patients in expansion states died while on a waiting list.
Work requirements have proven successful for food stamp and cash welfare programs. Surely, when the cost is compromised care for elderly, pregnant, young, and disabled people, these parameters are tolerable for the Medicaid program.
Work requirements are very popular, with 81 percent of voters in support. For a long time, Medicaid reform has been treated as radically unpopular and politically “untouchable.” In reality, Americans are receptive to commonsense reforms designed to weed out waste, fraud, and abuse and ensure the program works for those who need it.
According to a Paragon Institute survey, the support for work requirements is high:
“Do you support or oppose allowing states to implement a work requirement for able-bodied adult Medicaid recipients in their state?”
- TOTAL SUPPORT: 84%
- Strongly support: 42%
- Somewhat support: 42%
- TOTAL OPPOSE: 16%
- Strongly oppose: 8%
- Somewhat oppose: 8%
Do you support or oppose requiring able-bodied adult Medicaid recipients to work in order for them to continue receiving Medicaid benefits?
- TOTAL SUPPORT: 81%
- Strongly support: 44%
- Somewhat support: 37%
- TOTAL OPPOSE: 19%
- Strongly oppose: 9%
- Somewhat oppose: 10%
Further, 67 percent of voters agree with the following statement:
“Medicaid should be a temporary safety net, not a long-term entitlement for those who are able to work. Encouraging this population to work would improve their personal situation and help get them off Medicaid, saving money that could be directed toward those who need it most – children, seniors, and people with disabilities. Other public assistance programs like Food Stamps have work requirements and Medicaid should be no different.”
Work requirements are popular, will shore up care for those most vulnerable, will subvert out-of-control spending, and will increase labor participation. Lawmakers should seriously consider this reform in their upcoming reconciliation package.
