Following up on an important policy change to reorient safety net programs toward work, the Trump administration has just approved the third state request to implement work requirements in Medicaid. At least seven other state applications to do the same are still pending.
Critics have warned of catastrophe, and threatened litigation, to stop them. Some argue that work requirements will cause millions to lose health insurance coverage and will threaten the well-being of low-income Americans. But a closer look at what the states are actually proposing suggests these claims are overblown. In fact, what the states have been approved to do is so narrow in scope that, instead, proponents of work requirements should worry whether they go far enough.
Once fully implemented, Medicaid enrollees in Kentucky, Indiana and Arkansas will be required to participate in a work, education, training, job search or community service activity for at least 20 hours per week (80 hours per month) in order to maintain their Medicaid coverage. This rule applies to enrollees who are 18 to 49 years old, with a number of exceptions outlined in each state. All three states exempt parents with children at home, the disabled and those already working or attending school full-time. Arkansas exempts people participating in drug treatment and those receiving unemployment benefits.
This means that only Medicaid enrollees who are capable of work, not caring for a child and not already working or going to school at least part-time will be subject to the new requirements. Conditions can also be satisfied by searching for a job, volunteering or enrolling in a school or training program. It’s hard to imagine why those not exempt could not easily meet these requirements.
This raises another important question: Rather than being too harsh, how much effect will Medicaid work requirements really have with such a limited scope? Declining labor force participation in this country is a problem that can’t be explained away by demographics alone. Other advanced countries are facing the same demographic challenges, but America is unique in its labor force participation decline. Although debate over the cause remains, a recent review of the literature by economists Katharine Abraham and Melissa Kearney of the University of Maryland found that factors specific to individuals, such as their participation in public benefit programs, cannot be ruled out. This has led some to suggest that work requirements in safety net programs are part of the solution to increase labor force participation.
But how much can these Medicaid work requirements really achieve? According to the Kaiser Family Foundation, only a small share of the overall Medicaid population in each state will be subject to the requirements. And states will likely find it hard to monitor the activities of each participant, suggesting that it might be easy for individuals to give the appearance of compliance without really doing very much. For example, Arkansas is only asking enrollees subject to the requirement “to demonstrate electronically on a monthly basis that they are meeting them.” Other states have left these details to be determined.
All of this suggests that those hoping that Medicaid work requirements will help solve the country’s labor force participation problem will likely be disappointed. But perhaps that isn’t really the point. Safety net programs should be doing everything possible to ensure that employment is a priority. And that means establishing an expectation of work even if it’s a minimal one.
Survey data suggests that 87 percent of Americans, including 80 percent of poor Americans, agree that “poor people should be required to work or seek work in exchange for benefits.” Even if Medicaid work requirements have limited effect on employment rates, more broadly they serve as a social contract supported by the majority of the American public. They are worth pursuing for this reason alone, even if they will do little to address declining prime-age labor force participation.
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