At the tail end of April, Republicans in the House of Representatives passed a debt ceiling bill that includes a stipulation for states to implement work requirements for certain Medicaid enrollees. A new analysis from the Kaiser Family Foundation determined that if the work requirement was fully implemented in 2024 and the rate of Medicaid eligibility loss was as the Congressional Budget Office estimated, then 1.7 million enrollees would not meet work or reporting requirements and potentially face disenrollment.
Data showed that 91% of non-elderly Medicaid enrollees who are not on Supplemental Security Income or Medicare are working or face barriers to work.
States could continue to provide Medicaid to those enrollees but would not receive federal matching funds for doing so. It's unclear if any states would choose to do it, although the CBO estimated that more than half of enrollees would continue to be covered at the states' expense.
If states chose to keep all 1.7 million people enrolled, $10.3 billion of Medicaid spending would shift from the federal to state governments in 2024. A small number of states with the largest share of enrollees under the Affordable Care Act Medicaid expansion would account for almost half of the increased state spending or coverage losses.
WHAT'S THE IMPACT?
The Medicaid work requirement plan would require that certain enrollees between the ages of 19-55 work or participate in other qualifying activities for at least 80 hours per month. Those activities could include community service or job training. Those deemed mentally or physically unfit for employment would be exempted, as would pregnant people, those caring for a dependent child or incapacitated person, those in drug or alcohol treatment programs, or people who are in school.
If enrollees fail to meet those requirements for three months or more, the federal government would cease paying the federal share of Medicaid for their expenses. States could disenroll them or continue their coverage, but pay 100% of the costs. Eligibility for federal funds could resume at the start of the following calendar year.
The Congressional Budget Office has estimated that if the work requirements are enacted, about 15 million enrollees per year would be subject to the new requirements, and about 1.5 million of them would lose eligibility for federal funding. That would result in federal savings of about $109 billion over a 10-year period, but that cost would shift to states that elected to maintain coverage. About 60% of those who lost federal eligibility would become uninsured because they live in states that did not maintain coverage. For the states that did, costs would increase $65 billion from 2023 to 2033.
In summary, "under those requirements, federal costs would decrease, the number of people without health insurance would increase, the employment status of and hours worked by Medicaid recipients would be unchanged, and state costs would increase," the CBO said.
KFF estimated 16.7 million enrollees in the expansion group would be between ages 19 and 55 in May 2024 using the age distribution of expansion adults in administrative data. This estimate includes some parents of dependent children, who would be exempt from the work requirement but still potentially subject to reporting requirements. If 10% fail to meet the work or reporting requirements, as CBO assumed, 1.7 million enrollees could lose eligibility for federal matching funds in 2024.
THE LARGER TREND
The Biden administration first began taking steps to roll back Medicaid work requirements in 2021, citing the economic and health impacts of the COVID-19 pandemic, which it said could make it more difficult for Medicaid recipients to fulfill the requirements.
"Uncertainty regarding the current crisis and the pandemic's aftermath, and the potential impact on economic opportunities (including job skills training and other activities used to satisfy community engagement requirements, i.e., work and other similar activities), access to transportation and to affordable child care have greatly increased the risk that implementation of the community engagement requirement approved in this demonstration will result in unintended coverage loss," CMS said in letters to states at the time.
Hospitals in states that implement Medicaid work requirements could see their Medicaid revenues decrease by as much as 21%, their uncompensated care costs increase as much as 133% and their operating margins fall by upward of 2%, according to estimates by the Commonwealth Fund.