Understanding the Intersection of Medicaid & Work: A Look at What the Data Say
By Madeline Guth, Patrick Drake, Robin Rudowitz, Maiss Mohamed / April 24, 2023
While data show that the majority of Medicaid enrollees are working, there has been long-standing debate about imposing work requirements in Medicaid. For the first time in the history of the Medicaid program, the Trump Administration approved Section 1115 waivers that included work and reporting requirements as a condition of Medicaid eligibility in some states. However, courts struck down many of these requirements and the Biden Administration withdrew these provisions in all states that had approvals. Arkansas was the only state to implement Medicaid work requirements with consequences for noncompliance.
Work requirements are now back on the agenda as some Congressional Republicans have indicated that they will rely on a budget outline that would require Medicaid enrollees to work, or look for work, in order to receive coverage. In a speech on April 17, Speaker McCarthy emphasized work requirements as part of negotiations to increase the debt limit, and such requirements were included in the Republicans’ proposed debt limit bill released on April 19. In addition, Republican legislators in several states have proposed seeking work requirement waivers. In July 2023, Georgia intends to expand Medicaid eligibility to 100% of the federal poverty level (FPL), with initial and continued enrollment conditioned on meeting work requirements (after a federal judge overturned the Biden Administration’s withdrawal of Georgia’s work requirement).
Experience in Arkansas and earlier estimates of implementing work requirements nationally suggest that many could lose coverage due primarily with barriers in meeting work reporting requirements. An analysis from the Congressional Budget Office (CBO) found that a national Medicaid work requirement would result in 2.2 million adults losing Medicaid coverage per year (and subsequently experiencing increases in medical expenses), and lead to only a very small increase in employment. CBO estimates that this policy would decrease federal spending by $15 billion annually due to the reduction in enrollment. New attention on work and reporting requirements come as millions are at risk of losing coverage due to administrative barriers as states resume routine renewals and disenrollments with the unwinding of the Medicaid continuous enrollment provision that was included in the Families First Coronavirus Response Act (FFCRA) enacted at the start of the COVID-19 pandemic.
To provide context to these debates, this brief explores work status and characteristics of Medicaid enrollees in 2021 to answer three key questions:
What is the work status of Medicaid covered adults?
What do we know about Medicaid adults who are working?
What do we know about the intersection of work and health and the impact of Medicaid work requirements?
These data show that most Medicaid covered adults were either working or faced a barrier to work, leaving just nine percent of enrollees who could be directly targeted by work requirement policies.
What is the work status of Medicaid adults?
In 2021, most Medicaid adults who did not face a barrier to work were working (Figure 1). KFF analysis of federal survey data from 2021 reveal that, overall, more than six in ten (61%) nonelderly adults with Medicaid who are not also covered by Medicare and do not qualify for Medicaid as disabled under the Supplemental Security Income (SSI) program (referred to hereafter as “Medicaid adults”) were working full or part-time. The leading reasons for not working among remaining Medicaid adults were caregiving responsibilities, illness or disability, or school attendance. The remaining nine percent of Medicaid adults reported that they are retired, unable to find work, or were not working for another reason.
Those in better health and with more education are more likely to be working (Figure 2). Health status is the strongest predictor of work, with people in excellent or very good health twenty-seven percentage points more likely to be working than those in fair or poor health. Education level is also a strong predictor of work. Rates of work additionally vary by geographic region, age, and race/ethnicity, but not all variation is statistically significant (Appendix Table 1). Also, childless adults are significantly less likely to be working than parents (55% vs. 69%, data not shown). Parents make up 44% of the Medicaid adult population (and would qualify for exemptions to the work requirements proposed by Congressional Republicans).
Many Medicaid adults who are not working face barriers to moving into employment, such as functional disability. Even if they do not qualify for Medicaid on the basis of a disability through SSI, many adults on Medicaid have high rates of functional disability and serious medical conditions, especially among those not working. Approximately 17% of Medicaid adults have a functional disability, with the highest rates of disability among Medicaid adults not in the labor force (27%) (data not shown). Medicaid adults may also experience mental health conditions that impede their ability to work, with about one in three (30%) non-working Medicaid adults reporting depression.1
What do we know about Medicaid adults who are working?
Most Medicaid adults who work are working full-time, but those who work part-time face challenges to full-time employment (Figure 3). Among Medicaid adults who work, nearly half (48%) worked full-time (at least 35 hours per week) for the entire year (at least 50 weeks) (Appendix Table 2). Many Medicaid adults who work part-time (30% of all workers) cited that reasons for working part-time include work limits like shorter work weeks (less than 35 hours per week) (12%), slack work/business conditions (14%), or inability to find full-time work (6%) (Figure 3). Part-time workers also pointed to childcare problems (6%) and other family or personal obligations (19%).
Adults who work full-time may still be eligible for Medicaid in expansion states because they work low-wage jobs and still meet income eligibility criteria (Figure 4). An individual working full-time (35 hours/week) for the full year (50 weeks) at the federal minimum wage ($7.25 per hour) earns an annual salary of $12,688, below the Federal Poverty Level (FPL) for an individual in 2023 ($14,580) and the Medicaid eligibility limit of 138% FPL for nonelderly adults in states that have expanded Medicaid under the Affordable Care Act (ACA). Thus, an adult with this income would be eligible for Medicaid in an expansion state. However, working adults may be ineligible for Medicaid in non-expansion states where the median eligibility limit for parents as of January 2023 is 37% of the FPL (and ranges from 16% in Texas to 100% in Wisconsin) and childless adults are not eligible (except in Wisconsin, where they are covered under a Section 1115 waiver).
Many Medicaid adults who work are employed by small firms and in industries that have low employer-sponsored insurance (ESI) offer rates (Figure 5). In 2021, nearly five in ten (45%) Medicaid workers were employed in firms with fewer than 50 employees, which are not subject to ACA penalties for not offering affordable health coverage. Many Medicaid workers are employed in industries with historically low ESI offer rates, such as the agriculture and service industries (47%). Within industries, top occupations among Medicaid workers include cashiers, drivers, janitors, and cooks (Appendix Table 8). Many Medicaid workers reported limited access to benefits, with fewer than half (46%) of Medicaid workers reporting access to paid sick leave in 2021 (data not shown).2
What do we know about the intersection of work and health and the impact of work requirements?
Medicaid can support employment by providing affordable health coverage, and research suggests that the effects of work requirements on health and employment are likely limited. Research shows that being in poor health is associated with increased risk of job loss, while access to affordable health insurance has a positive effect on the ability to obtain and maintain employment. Medicaid coverage helps low-wage workers get care that enables them to remain healthy enough to work. Also, states may launch initiatives, such as voluntary employment referral programs, to support employment for Medicaid enrollees without making employment a condition of eligibility. In focus groups, enrollees report that Medicaid coverage helps them to manage chronic conditions and supports their ability to work jobs that may be physically demanding. However, a review of research on the relationship between work and health found that although there is strong evidence of an association between unemployment and poorer health outcomes, there is limited evidence on the effect of employment on health. Further, research from other public programs, including TANF and SNAP, suggests that work requirements have had little impact on increasing employment. A CBO report finds that earnings associated with employment gains due to TANF and SNAP work requirements were offset by loss of income for those no longer eligible for the programs.
Available implementation data suggests that Medicaid work and reporting requirements are confusing to enrollees and result in substantial coverage loss, including among eligible individuals. In Arkansas, the only state so far to implement such requirements with consequences for noncompliance, over 18,000 people lost coverage when the requirements were in place from August to December 2018. Research indicates that enrollees in Arkansas were unaware of or confused by the new work and reporting requirements, which did not provide an additional incentive to work beyond economic pressures. Many enrollees reported struggling with the administrative processes required to report their employment, including due to technical issues and/or lack of internet access. Notably, in 2021, about 6% of Medicaid enrollees had no access to the internet (Figure 6). Based on experience with work requirements in other public programs, an earlier KFF analysis of potential nationwide reductions in Medicaid coverage if all states implemented work requirements suggested that most disenrollment would be among individuals who would remain eligible but lose coverage due to new administrative burdens or red tape, and only a minority would lose eligibility due to not meeting new work requirements. Similarly, a CBO analysis found that a national Medicaid work requirement would reduce Medicaid enrollment by about 2.2 million adults, in large part due to failure to comply with reporting requirements. Many of these adults would become uninsured and pay more for health care. CBO estimates that this policy would result in only a very small increase in employment.
In part due to evidence on the impacts of work requirements, courts and the Biden Administration determined that such requirements do not further Medicaid program objectives. A January 2021 executive order from President Biden directed HHS to review waiver policies that may undermine Medicaid. CMS subsequently withdrew Medicaid work requirement waivers in all states that had approvals. Previously, in 2020 the DC appeals court affirmed that the Trump Administration’s approvals of work requirements in Arkansas and New Hampshire were unlawful because the Secretary failed to consider the impact on coverage; before leaving office, the Trump Administration asked the Supreme Court to reverse these decisions. After the Biden Administration withdrew the Arkansas and New Hampshire work requirements, the Administration asked the Supreme Court to vacate the lower court decisions and dismiss the Arkansas case as moot (as that waiver had expired) and send the New Hampshire case back to HHS (as New Hampshire had not asked the Court to review the case involving its waiver). In April 2022, the Court granted this motion, effectively putting an end to the pending litigation. This dismissal does not preclude a future presidential administration from revisiting work requirements; however, any future work requirements approved would likely face legal challenges.
Looking Ahead
Right now, Georgia is the only state with an approved work requirement waiver, as a Federal District Court judge vacated the Biden Administration’s withdrawal. Once implemented in July 2023, Georgia’s waiver will expand Medicaid eligibility to 100% of the federal poverty level (FPL), with initial and continued enrollment conditioned on meeting work and premium requirements. Section 1115 monitoring and evaluation requirements will require Georgia to track and report the number of enrollees who gain and maintain coverage. As only Arkansas has implemented Medicaid work requirements with consequences for noncompliance, the results of monitoring and evaluation in Georgia will provide further evidence as to the impacts of work requirements—however, Georgia is unique in applying work requirements to a new coverage group rather than to an existing Medicaid population.
Additionally, other states have indicated they may pursue work requirement waivers in the future, and Congressional Republicans have recently discussed a federal Medicaid work requirement tied to approval to raise the debt limit. Although the Biden Administration has said work requirements do not further Medicaid objectives, a future presidential administration could revisit this view and allow state waivers (though any future work requirements approved via waiver could face legal challenges).