The 'One Big Beautiful Bill' could help realign state interests with the national interest and finally force some fiscal accountability.
Congress is considering the imposition of a work requirement for Americans receiving Medicaid, and it is receiving criticism from states, Democrats, Republicans, and the Congressional Budget Office (CBO). These critics claim a work requirement would create considerable administrative burdens and deter enrollment, but the current research on the topic that is underlying these criticisms is not predictive of the policy being debated.
Over the past five years, spending on Medicaid has grown faster than both the population and inflation, and a work requirement will help manage program costs by ensuring working-age adults are gainfully employed and contributing to the economy and also that neither states nor individuals are taking advantage of lax oversight and drawing undeserved federal dollars.
The work requirements Congress has in mind are narrow and relatively relaxed. For one, they do not apply to parents, children, the disabled, pregnant women, or the elderly. They apply only to able-bodied adults between the ages of 19 and 65. They also require less than 20 hours per week, which can be met by attending school or volunteering.
A second criticism is that a work requirement is really attrition through bureaucracy, with changes designed to drop deserving people out of Medicaid through paperwork and administrative hoops.
The CBO seems to agree. It estimates that the work requirement will drive 4.2 million recipients out of Medicaid. This would be more than 15 percent of able-bodied, childless adults on Medicaid. But the Kaiser Family Foundation estimates that only 8 percent of able-bodied adults are unemployed. How does the CBO estimate more people will lose coverage from a work requirement than are unemployed?
Resting on several unreliable assumptions, the CBO’s estimates are fundamentally flawed. First, its estimates are based on state experiences implementing work requirements — Georgia and Arkansas, specifically.
But the Georgia work requirement isn’t reliable as a gauge for several reasons. It’s only in its second year, and data on it are from its initial year. In addition, Georgia did not implement a work requirement on an already-existing Medicaid population; it added an entirely new program for people who were previously unqualified for Medicaid. The slow take-up of the program has convinced work-requirement critics that its problems will be universal. Also, Georgia’s reporting requirements are more onerous than the ones Congress is considering.
The Arkansas experience, too, should be discounted. It only really operated for ten months and was under constant threat of discontinuation throughout. During that time, there was a substantial reduction in enrollment, and critics blame the red tape.
Drawing significant conclusions from the Arkansas experience has two major deficiencies. First, it ignores the possibility that these enrollment numbers weren’t real in the first place — they may include phantom enrollment figures for beneficiaries who had moved, received raises, or moved to better jobs but states kept on the rolls.
It also ignores the state’s ability to make adjustments to problems that arise, like paperwork issues. In most states, managed-care organizations are tasked with handling the health-care needs of Medicaid beneficiaries. States pay them for every beneficiary enrolled in their plan on a monthly basis. Thus, the organizations have an incentive to ensure all who are eligible sign up and stay signed up. Given ample time to iron out the problems of a new policy, the organizations will adapt their systems to minimize the possibility eligible beneficiaries will go uncovered.
The managed-care organizations could help with the administrative costs that states are concerned with, too, though analysis has shown that states have reduced their own Medicaid spending since the mid-2010s and let the federal government take up more of the costs.
The rapid expansion of Medicaid highlights a major problem currently faced by Congress and the taxpayers: States have diminished incentives to ensure government programs like Medicaid are spending taxpayer money responsibly. Why would a state invest in program integrity if the savings are shared with 49 other states, when, if you’re more lenient, you get to keep all of the dishonest funds for yourself?
The upshot is that Medicaid spending has escalated more than 50 percent in the last five years. Imposing a work requirement would help fix that problem. And the American people support that fix. Today, 60 percent of voters support work requirements for able-bodied adults in Medicaid.
The “One Big Beautiful Bill” could help realign state interests with the national interest and finally force some fiscal accountability.