Here we go again. Speaker McCarthy, in the Limit, Save, Grow Act of 2023, legislation to raise the U.S. debt limit, has introduced work requirements for Medicaid.
A primary objective for welfare-to-work programs, of which Medicaid work requirements are one, is to reduce expenditures by limiting access through administrative hurdles and restrictive criteria. But we know from the experience of states that previously took advantage of the Trump Administration’s willingness to permit work requirements in Medicaid through 1115 waivers, as well as experience over many years with work requirements in other programs like SNAP, that these barriers do not really save money.
The Congressional Budget Office (CBO) estimates the potential federal savings at 0.5% of discretionary spending. While this is about $109 billion, it needs to be understood in context. It is less than 1%. Yet, millions of people will lose their health insurance coverage. Additionally, States not only have to invest in systems that enable monitoring and enforcement of work requirements (which costs many millions of dollars) but end up spending money elsewhere, such as through higher disproportionate share of hospital payments and other subsidies or state-funded only health programs. In fact, in its estimate, the CBO predicts that about 900,000 adults who would lose coverage through federally funded Medicaid would remain on states’ state-funded only programs. It is unquestionably a penny-wise, pound-foolish policy, and we know this.
So, if the policy doesn’t really save money, is there something to the intent of enabling Medicaid beneficiaries to “lift themselves out of poverty through work”? Turns out the answer there is also an emphatic nope. In an analysis released in June 2022, the CBO found that while work requirements in means-tested programs generally increased employment rates, it had little effect on poverty. So, while people are working, they are still in poverty. And those who lost benefits because they could not meet the work requirements, were left in deep poverty. In fact, CBO says, “…work requirements have probably played a role in increasing the number of families in deep poverty.”
First, let’s correct the fallacy that people enrolled in Medicaid (or other means-tested programs) aren’t working. This is simply wrong. Here’s some data:
- About half of adults (19-64) enrolled in Medicaid work full-time throughout the year
- About 30% of adults enrolled in Medicaid work part-time
- Of those working part-time, the reasons for doing so:
- Employer not offering more hours
- Unable to find full-time work
- Childcare problems
- Family or personal obligations (such as being a caregiver)
- In school
- Health or medical limitations
- Many people work in low-wage jobs that provide income below the federal poverty level
- A full-time job working at the federal minimum wage generates annual earnings of $12,688.00. The 2023 federal poverty limit for an individual is $14,580, and for a family of three is $24,860.
- Many people work for companies that do not provide health insurance as an employee benefit.
Those who are enrolled in Medicaid but not working are not working for reasons such as illness/disability, enrolled in school, experiencing barriers (such as no childcare, transportation), caregiving, retirement, or being unable to find work.
Second, we must recognize and accept that poverty is deeply entrenched in the United States. We can pretend it’s not or continue to blame what we perceive as individuals’ shortcomings. But that’s not going to make it change. More than 35 million people live in poverty in the United States, which would be much higher if not for programs like TANF, SNAP, and Medicaid.
If the goal really is to help people out of poverty, there are numerous things we can do. They cost money. I’m not hiding the ball on that one. But, of all the ways we spend money at the federal level, spending money this way is sensible. Actions we can take to address poverty include:
- Raising the federal minimum wage and eliminating the subminimum wage.
- Establishing paid sick, family, and medical leave.
- Addressing pay equity gaps.
- Providing affordable childcare and early childhood education.
- Expanding access to affordable, high-quality healthcare.
- Increasing affordable housing.
What is this policy really about if imposing work requirements doesn’t result in meaningful savings or lift people out of poverty? After 25 years of working in this area, I can only conclude that it is, in fact, nothing more than a punishment for people who have the audacity to be poor.
