Medicaid Work Requirements Are Back. What You Need To Know

Dan Gorenstein (DG): Medicaid continues to be on the chopping block as Republicans in Congress look to slash federal spending to pay for tax cuts and other policy priorities. There are lots of ways to shrink this public health insurance program that covers 80 million low-income Americans, including children, seniors and people with disabilities.

One of the most popular? Requiring people to work, attend school or volunteer to stay on Medicaid.

House Speaker Mike Johnson: If you add work requirements into Medicaid, it makes sense to people. It’s common sense. You find dignity in work, and the people that are not doing that, we’re going to try to get their attention.

DG: Critics of the policy are quick to point out that 64% of adults on Medicaid already have jobs.

Ben Sommers (BS): It’s really hard to craft a work requirements policy in Medicaid that’s going to move the needle substantially on employment without catching a lot of people up in red tape, because so many folks are already doing what you want them to do.

DG: Analysts say adding a work requirement could save the federal government $100 billion over the next decade. It would also likely mean millions getting kicked off the program. 

Today, we look at one state’s short-lived experiment with work requirements and what lessons policymakers have learned to try and make the program work better.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein. This is Tradeoffs.

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DG: Arkansas became the first state to add work requirements to its Medicaid program in 2018. Trevor Hawkins, who worked at Legal Aid of Arkansas, took calls day after day with people who were confused why they had lost their coverage. Many of the people he talked to were scared.

Trevor Hawkins (TH): He was struggling to breathe and saying, “I need help. I’m on the way to the emergency room, and I need my Medicaid.”

DG: Trevor is still rattled by the fear he heard over the line when he talked to Adrian McGonigal that fall. Adrian, who lived in a small town in the northwest corner of the state, told Trevor he’d gone to refill meds for his COPD, a serious lung condition.

TH: He learned at the pharmacy, that he no longer had his insurance, and he would have to pay, it was something like $800. And he did not have the money to pay that out of pocket.

DG: The 40-year old told Trevor that he’d hit up some other drug stores. They all said the same thing: His Medicaid was shut off. The only way to get his medications was to pay.

It was getting harder and harder for Adrian to breathe. One worried pharmacist suggested to Adrian that he go to the ER and to call Trevor.

TH: It was one of the most dire situations imaginable.

DG: Here’s the thing. Adrian? He had a full-time job. He worked at a chicken processing plant.

TH: It was the best job he had ever had in his life. He was sort of bouncing around between family members’ homes. And this job was going to be the one that got him back on his feet.

DG: Adrian had reported his income to the state when the new rules went live in June. But he was expected to log his hours every month. Adrian didn’t know that.

After 90 days without an update, the state cut off his coverage.

TH: He thought he was good. And then he wasn’t.

DG: A few days later, Trevor appealed the decision, arguing Adrian had tried to follow the rules, and he deserved to get his Medicaid back. Then, they waited.

During the first Trump administration a total of 22 Republican states sought federal approval to make some kind of work activity a requirement for Medicaid coverage. Critics considered the move disingenuous — just a politically palatable way to shrink their Medicaid rolls.

But the states defended the proposal. Here’s then-Arkansas Gov. Asa Hutchinson at a press conference in March of 2018.

Gov. Asa Hutchinson: This is not about punishing anyone. It’s about giving people an opportunity to work. It’s to give them the training that they need. It’s to help them move out of poverty and up the economic ladder. That’s the objective of it.

DG: The very idea of Medicaid has troubled many conservatives for decades, often seeing it as a handout that discouraged people from helping themselves. Work requirements were seen as a potential antidote.

Most states planned to apply the pull yourself up by your bootstraps policy to people who became eligible for Medicaid under Obamacare. These were people who made up to $12,000 for an individual or $21,000 for a family of three in 2018.

Angela Rachidi (AR): I think there is an expectation that those work capable people should be working before they turn to the government to provide assistance for them.

DG: That’s Angela Rachidi, a senior fellow in poverty studies at the American Enterprise Institute. Angela says states’ optimism that work requirements could break the cycle of poverty came from evidence from the 1990s. Back then, some states added work requirements to their cash welfare programs.

AR: Once you introduced work requirement, more single mothers who had been receiving cash assistance went to work. 

DG: The data on work requirements in welfare is mixed. Research shows for every single mother who went to work and increased her income, others failed the work requirement, lost their cash assistance, and fell deeper into poverty. Other researchers point out that any employment gains often faded after a few years. AEI’s Angela Rachidi says the evidence on welfare work requirements varies because each state’s program was slightly different.

When it came to Medicaid, though, nobody had ever tried it. And Arkansas Gov. Asa Hutchinson was committed to being first.

Hutchinson: We’re ready with our systems. This will be going fairly quickly, and we’ve got our processes down.

DG: The state tapped Ray Hanley to help implement the new rules. Ray’s job: Tell 60,000 Arkansans they had to find work, go to school or volunteer if they wanted to keep their Medicaid. Ray was the CEO of a nonprofit that was leading outreach efforts.

Ray Hanley (RH): We probably had at least 100 people on the phones. They all had their headsets, the computers, the sound baffles around them.

DG: From 8 in the morning to 8 at night, Ray’s team called and called. Oftentimes, no one picked up. When someone did answer, Ray’s agents launched into their script.

RH: They would introduce themselves and say, “the state has this new policy, and I want to explain to you what is required.” 

DG: The agents said that everyone between ages 30 and 49 had to be working, looking for a job, volunteering or going to school for 80 hours a month. If they failed to report that information for three months … their coverage would be terminated. Exceptions were made for people with a kid at home, in drug treatment or who had a disability.

RH: We did pretty much anything we could think of that would work. We could do it in Spanish. We could do it in Marshallese if we needed to. It sounded like a beehive sometimes when you would just walk through.

DG: The state ran TV and radio ads and sent more than 900,000 letters and emails between April and December that year. 

RH: You could not argue that the state didn’t make a concentrated effort to reach and educate people.

DG: Ray knew it would be hard to get the word out. He had worked in Medicaid since the 1970s and had been the state’s Medicaid director for 16 years. He liked the idea of encouraging people to work, but Ray worried that people who struggled to get a job because of transportation or child care would still end up losing coverage.

RH: This is a very mobile population. They move a lot. They don’t like to answer a phone number they don’t recognize. It’s just hard to reach people.

DG: While Ray grappled with one major challenge — contacting recipients — Adrian McGonigal was experiencing another — falling through the bureaucratic cracks.

Without his coverage, Adrian was without his lung medication. Adrian’s breathing, of course, got worse. Trevor Hawkins said Adrian had to stop working and kept ending up in the hospital.

TH: His doctor told him it causes damage to your lungs every time you have one of those severe attacks.

DG: In January 2019, three months after he first called Trevor, Arkansas restored Adrian’s Medicaid. That spring, a federal judge ordered Arkansas to shut down its work requirements program, ruling that making work a prerequisite of medical coverage was incompatible with the goals of Medicaid.

That case effectively ended the first Trump administration’s experiment in all states. But for Adrian, the damage had been done. 

TH: Because it took so long to get his coverage restarted and getting back on the treatments, he couldn’t get that job back. He lost his job because of the work requirements.

DG: Adrian landed some part-time work at fast food places, but his health — which kept going down hill — made holding down a job tough. Eventually, Trevor helped Adrian get on disability.

TH: It just got to where he couldn’t work. But he never stopped trying until he just physically couldn’t.

DG: After President Trump took office this year and it seemed like work requirements were making a comeback, Trevor called Adrian. But Adrian’s number had been disconnected.

A few weeks later, someone sent Trevor an obituary. Adrian had died of a heart attack a few days before Thanksgiving. He was 46 years old.

TH: I thought back to everything he went through and how his life really went on a downward spiral, despite him objectively doing everything they wanted.

DG: Adrian is one of 18,164 people who lost Medicaid coverage for failing to meet Arkansas’ work requirements — about one-third of the people who were subject to it. Numerous qualitative studies show that many of them were like Adrian: unaware of the policy or just confused about how to comply.

The most rigorous evaluation of Arkansas’ work requirement — a 2019 study published in the New England Journal of Medicine — found no evidence of more people getting jobs, the program’s original goal. Instead, the researchers found that people were more likely to become uninsured.

When we come back, how some states are thinking about work requirements differently this time around, and why even supporters of the policy worry about a proposed federal mandate.

MIDROLL

DG: Welcome back.

With President Trump in the White House and the GOP in control of Congress, work requirements in Medicaid are again on the table. Republicans in the House have introduced a bill that would add a national work requirement to Medicaid in hopes of shrinking the rolls and saving an estimated $100 billion over 10 years. People following the GOP’s so-called “big beautiful” budget bill expect the policy to be part of their plan to cut at least $1.5 trillion in federal spending.

Separately, several states want permission from the Trump administration to let them roll out work requirements at the state level.

In light of what happened in Arkansas in 2018 — namely, dropping nearly 20,000 people from the program — we asked Tradeoffs producer Ryan Levi to dig into these new proposals, and he joins me now.

Ryan, how are you?

RL: Hey there, Dan. Doing alright, thanks.

DG: So between covering a bunch of breaking health care news these last few months, you’ve also been diving deep into work requirements. Reading the research, talking to experts on all sides. Ryan, given what happened in Arkansas, which it seems like many folks see as a pretty clear failure, is it possible for a work requirement to work?

RL: Well as you said, Dan, a lot of people believe Arkansas, with all the coverage losses and administrative headaches, that that was really a cautionary tale. Yet here we are, maybe closer than ever to a national work requirement in Medicaid.

So if policymakers are going to pursue this, I wanted to know what lessons, if any, could be applied to new proposals. And whether people expect to see different outcomes this time around. 

DG: But what success looks like, right, is complicated, in part because people have different definitions of success. 

RL: Absolutely. Based on my reporting, Dan, I’d say there are basically three definitions of success. First, help people get good jobs, move off Medicaid, and onto private insurance.

DG: Right. Break the cycle of poverty. This is what Arkansas Gov. Asa Hutchinson talked about back in 2018.

RL: Exactly. Another version of success is more philosophical. I think Louisiana Sen. John Kennedy captured it well in a Fox News interview he did earlier this year.

Kennedy: It’s not just about the money. There’s a moral principle. If you can work you should work. These programs were not meant to be parking lots, they were meant to be bridges. And for some people, not everybody on Medicaid, but for some people, the best way to get back on your feet is to get off your ass.

RL: I want to call out here, Dan, that almost everyone who is currently on Medicaid and can work, is already working. As you mentioned earlier in the show, 64% of adults on Medicaid have full or part time jobs. And another nearly 30% are already going to school, they’re caregivers or they’re disabled — all circumstances that would exempt them from most work requirements. 

DG: Doing some quick math here, Ryan, that leaves less than 10% of people who could get pushed into a new job by this policy. And when you think about how few people that is, you wonder if pulling people out of poverty is the actual motivation behind work requirements. That, at least, is the argument from critics.

RL: It is. And it’s also actually a great segue into the third and final definition of success, Dan, which is saving the government money. The Congressional Budget Office estimated that a national Medicaid work requirement would result in the federal government covering 1.5 million fewer people. People losing their Medicaid, Dan, is how the government saves money from work requirements. 

DG: Right. People losing their Medicaid is how the government saves money. 

OK, so those different definitions of success speak to three very different motivations. What’s your sense Ryan of what’s driving the interest in work requirements right now: Helping people move up, the moral principle, or just a desire to shrink Medicaid and do something else with the money?

RL: Well, you certainly hear state officials and federal lawmakers touting the first two most often. But I talked to several Medicaid experts, Dan — including supporters of work requirements — who are worried that congressional Republicans in particular really just want to cut costs to pay for President Trump’s agenda.

Here’s Barbara Sears Roshon. She was a Republican state legislator and then Medicaid director in Ohio in the 2010s.

Barbara Sears Roshon: For the feds to say, “you shall have a work requirement and it shall look like that,” I think that takes away from the fact that states are intensely different. A very rural state is not going to have anywhere near the same number of opportunities or issues or concerns that a very, very urban state is going to have.

DG: Hearing that reminds me, Ryan, that when we talk about Medicaid policy, there’s the split we usually think of — the one between Democrats and Republicans. But there’s often the split, right, between the feds and the states.

Now, I know we are still waiting for Congress to work out how work requirements might fit into their big budget bill. So let’s set that aside and talk about the states that are interested.

RL: Sure. So, so far, we’ve got our old friend Arkansas.

DG: Of course.

RL: As well as Ohio and Arizona, who have already submitted formal requests to the Trump administration. There are several other states, I think close to a dozen, including Indiana and South Carolina, that are also moving in that direction.

Then we have Georgia, which actually has a work requirement in place now, and they’re asking the Trump administration for permission to continue it and to tweak it a little bit.

DG: And going back to our original question: Do these new proposals seem to be taking lessons learned from Arkansas 1.0?

RL: They do.

BS: They are pretty substantially different.

RL: This is Ben Sommers. He’s a physician and health economist at Harvard, and he led the research team that studied Arkansas’ work requirements in 2018. Now, as you know, Dan, Ben is no fan of work requirements, but he thinks Arkansas’ new proposal includes some improvements. In particular, he likes that the state is not immediately throwing people off the program if they’re not working.

DG: Or if the state just thinks they’re not working … like what happened to Adrian McGonigal. What instead is Arkansas doing, Ryan?

RL: Instead of a hard requirement that someone has to work 80 hours a month or be in school or sick or a caregiver, Arkansas wants a more personalized system. The state says they will use data it already has — like tax records, medical status, whether someone is getting food assistance — to determine if that person meets the work requirement.

DG: And if they are not, what happens then?

RL: Then they will be assigned a “success coach,” which basically, seems to me is like a caseworker who is supposed to work with the person to come up with a plan to connect them with resources and support. Ben told me his eyebrows went up when he heard this.

BS: This is fundamentally different than what I think a lot of the rhetoric around work requirements is typically talking about. Rather than “do these things or else we take your coverage, this is “do these things, and if not, we’re going to work with you to try to improve things for you.”

RL: I want to underscore this, Dan, I heard it over and over again: If you want people to find a job, you need to help them find a job.

BS: I think the carrot approach is likely to be more effective than the stick, giving people the supports they need to go work.

DG: It sounds like one of the biggest lessons from Arkansas is that — no surprise — incentives matter. Are other states also taking this lesson to heart?

RL: Ohio is. I talked to Maureen Corcoran who runs the program there. She says her agency plans to work with the state’s Department of Jobs and Family Services to help address people address transportation, child care and even lack of available jobs

Maureen Corcoran: We have to acknowledge the complexities that people will be dealing with, and we have a responsibility to help overcome those and to help connect people.

RL: Another big lesson from Arkansas is trying to make it easier for people to prove they are working or qualify for an exemption. As we’ve talked about, most people on Medicaid — around 90% — are either working or would qualify for one of the common exemptions. But the paperwork and bureaucracy involved with proving that is what tripped so many people up in Arkansas.

DG: This seems like a big deal, a big lesson learned. 

RL: Absolutely. Arkansas, Ohio and Georgia are all ditching this monthly reporting that cost Adrian McGonigal his coverage. Instead, the states told me they want to use existing data to figure out whether someone meets the requirements, so people can avoid submitting extra paperwork.

DG: What do the experts you interviewed, Ryan, think of these tweaks? Like, how confident is someone like Ben Sommers that states actually have the data infrastructure to pull this off? This sounds pretty tough to do.

RL: Yeah, so Ben says it depends on the state. Some states are set up well for this, but he’s worried that many would struggle. And if states can’t get the data they need, they’ll have to get the info from people themselves. And we heard how hard that was in Arkansas.

DG: Right. Super transient population. People are hard to find. How prepared do states seem to do the outreach required?

RL: Arkansas and Ohio officials told me they’re going to rely on so-called trusted messengers, like food banks and doctors, to get the word out this time. Ohio Medicaid Director Maureen Corcoran says those are places people on Medicaid already turn to for information.

MC: So taking advantage of the whole health care network for both getting messages out, but also input about how to do this in the best way, the most humane way, a way that provides the best education or support to people.

RL: I think this is another really important point, Dan. All of these lessons learned — outreach, helping people find jobs, making it easier to show you’re working — they’re all great aspirations. But they’re going to require execution too.

DG: I mean I’m thinking about Ray Hanley in Arkansas with his big buzzing call center. His whole job was to reach people.

RL: Yeah, and it was really, really hard to do. That’s one thing we’ve consistently seen in Medicaid, Dan. When new policies are rolled out, whatever they are, states often struggle to communicate with the people in the program to tell them what’s going on. So if, or when, states introduce work requirements, it’s likely that some people will end up losing coverage even if they are in compliance.

DG: So let’s take stock of where we are right now, Ryan. 

On a lot of levels, Arkansas’ 2018 plan fell well short of its own goals. The research shows tying health insurance to work failed to lift people out of poverty. And again, 18,164 people lost their coverage, and research suggests most of them were still eligible for that coverage.

Seven years later, work requirements are back, and states say they will invest more in helping people find work and make it easier for people to keep their Medicaid.

RL: I think that’s right, Dan. Based on the people I’ve talked to, there’s some real enthusiasm for applying these lessons learned from Arkansas. That said, there’s also concern that a national work requirement plan would just duplicate a lot of the failures we saw with Arkansas 1.0. Case in point, a recent paper out of the Urban Institute, a DC think tank, estimates that if we have a national work requirement, as many as 5 million people could lose their Medicaid.

DG: I mean, this is still a largely untested idea, and what Republicans in Congress are talking about would take that to scale.

RL: Yeah, you know, it’s interesting, Dan. I talked to Angela Rachidi. She’s at the American Enterprise Institute and a supporter of work requirements. She told me if the goal is to help people get better jobs, Congress should start small.

AR: If they came and said we want work requirements to increase employment among this population, I would say, well, if you want to do that, you’d want to do it kind of on a small pilot based way in order to develop evidence and then use that evidence to either scale up or to discontinue programs.

DG: This seems to really take us back to the beginning of our conversation, Ryan, where we talked about the different definitions of success. All this evidence and lessons learned only matter if the goal of the policy is to get people into better jobs and on a path to more economic success. But if the goal is to identify savings to pay for tax cuts, then the evidence and data matter a lot less. It’s just dollars.

RL: Here’s what I keep coming back to: Regardless of why policymakers want to do this, the potential impact on people remains the same. Their health insurance, their ability to access care is what’s at stake.

DG: Tradeoffs producer Ryan Levi, thanks so much for your reporting.

RL: My pleasure, Dan.

DG: The House committee that controls Medicaid’s budget is expected to release more details of its plans to cut Medicaid — including a possible national work requirement — in early May.

I’m Dan Gorenstein, this is Tradeoffs.