COVID-19 Halted Medicaid Work Requirements. Should They Come Back?

In 2018, the Trump administration announced a new policy allowing states to require certain Medicaid enrollees to do a minimum number of “community engagement” hours in order to keep their coverage. These policies, often called work requirements, differ from state to state. They usually dictate that “able-bodied” Medicaid beneficiaries in a specified age range must spend a target number of hours either working or performing other qualifying activities (including job training, caregiving, or volunteering [CMS 2018]). Critics claim that these programs only serve to limit Medicaid enrollment by adding bureaucratic barriers without encouraging work. President Biden begins his administration with this controversial program in stasis, a Supreme Court case on the horizon and an increasingly complicated road to ending the program.

Work requirements are in a precarious position. The Family First Coronavirus Response Act, signed by President Trump in March 2020, has prevented states from any sort of Medicaid disenrollment. This has effectively put a pause on work requirements until the end of the pandemic emergency period [Medicaid.gov 2020]. Even before the pandemic, several of these programs, including the pioneer programs of Arkansas and New Hampshire, were stopped. U.S. District Judge James Boasberg ruled that they failed to address “the ‘core’ objective of Medicaid: the provision of medical coverage to the needy” [Galewitz 2019]. The Supreme Court announced it would hear the Trump administration’s appeal in December 2020, but the Biden administration has directed HHS to reevaluate the government’s position [Rosenbaum 2021; Inserro 2021]. To make matters more complicated, in the final weeks of the Trump administration, then Centers for Medicare & Medicaid Services administrator Seema Verma announced a change in procedure for the Medicaid work requirement waivers. Should the Biden administration choose to end the program, they will now have to wait nine months to hear appeals from the states affected [Galvin 2021].

Regardless of the administrative hurdles, the main question the Biden administration faces is whether these are good policies. Should they ever come back? Recent research on the effect of the first program implemented in Arkansas indicate that these policies might do much more harm than good.

Arkansas was the first state to implement work requirements in June of 2018, and these requirements were in place until they were halted by Judge Boasberg in March 2019. Arkansas disenrolled 18,000 Medicaid enrollees as a result of this program, approximately a quarter of all the enrollees subject to the requirement [Hill 2019]. Overall, the uninsured rate of the age group subject to work requirements increased from 10.5% to 14.5%, with no similar increase in other age groups [Sommers 2019].

The stated goal of these policies is to incentivize work, not to increase or decrease coverage. However, on that front Arkansas’s policy seems to have had little success. According to the NEJM’s analysis, 97% of Arkansans in the age group were already meeting the hour requirements for approved activities before the policy was put in place. This amount actually decreased slightly over the span of the program [Sommers 2019].

If 97% of the target Arkansans were meeting this goal, why did so many people lose coverage? One answer points to misinformation. Many Arkansans hadn’t heard about the new law and even more didn’t know if it would apply to them or how it worked. Of those surveyed who didn’t report their hours, 40% of them said they didn’t think they qualified for the new requirements. The rest of the respondents were split between lack of access to the internet and confusion about how to report their hours [Sommers 2019; Hill 2019]. This survey was a relatively small sample, but it suggests those who should have kept their coverage lost their insurance because they didn’t understand the law.

New Hampshire started its program after Arkansas and the first studies of the program found similar results [Hill 2020]: work requirements led to qualifying people losing their health insurance. But even if the programs were implemented perfectly, how many people would be at risk of losing coverage? According to a Kaiser Family Foundation study, 93% of non-elderly, non-disabled adults on Medicaid are either working (63%) or are not working due to an exempt reason (30%). That leaves just 7% of the Medicaid population who were not working and might not be exempt from the law [Rudowitz 2019]. This category includes those actively seeking employment and early-retired people who are above the age range for work requirements.

There is also the broader issue as to whether those who are unable to meet the goals should lose insurance. There is a lot of evidence showing that Medicaid fights poverty [Chee 2018]; Medicaid improves the health of its beneficiaries and those with better health are more likely to work and perform better at work [Rudowitz 2019; Tipirneni 2019]. If the goal is to increase the already high percentage of beneficiaries working, then causing the unemployed enrollees lose their healthcare could be counterproductive.

President Trump left a complicated state of affairs for the Biden administration. The primary effect of work requirements has been to wrongfully disenroll people in need, adding extra administrative hurdles without an impact on employment. In macro terms, the policies to date have been ineffective at best; in their effect on individuals, especially of vulnerable populations, they could be devastating.