The question before the high court is a legal one. But as a matter of policy, work requirements are a great way to rein in Medicaid’s out-of-control spending and preserve the program’s scarce resources for the truly needy.
Several states—including Kentucky, Arkansas, and New Hampshire—have pondered work requirements in hopes of limiting Medicaid enrollment, which has exploded in recent years. The program was created more than a half-century ago to provide health insurance to the poor, disabled, and pregnant women. But as of July, it covered nearly 69 million people. That’s roughly one in five Americans.
About 12.4 million of those enrollees signed up through Obamacare’s expansion of the program to everyone with income below 138% of the federal poverty line, or roughly $17,600. That includes the able-bodied. To date, 38 states and District of Columbia have signed onto the expansion.
Many states thought expanding Medicaid would be a great deal. After all, Obamacare bound the federal government to pay 90% of the cost of covering the expansion population.
Even with that hefty assist, several states are struggling with their Medicaid tab.
For starters, many more people have signed up than the states projected. In 2017, the Foundation for Government Accountability investigated enrollment of the expansion population in 24 states as of 2015 and 2016—and found that it was more than double what the states expected.
Medicaid has long been the 800-pound gorilla in state budgets. States cover a little over one-third of the more than $600 billion the country spends on the program each year. Together, Medicaid and the related Children’s Health Insurance Program account for nearly 30% of state spending. They’re the second-largest line item in state budgets.
Every dollar that goes toward a new, able-bodied Medicaid beneficiary is a dollar that can’t go toward other state responsibilities like public safety or infrastructure.
And thanks to the pandemic-induced economic downturn, those tax dollars are harder to come by. According to a Kaiser Family Foundation survey, 17 of 19 states with budget projections for 2021 reported a Medicaid budget shortfall was “nearly certain” or “likely.”
Work requirements can help states preserve their Medicaid resources for the program’s original beneficiaries—the impoverished and disabled—by nudging the able-bodied on the path to self-sufficiency. Research from the Buckeye Institute has found that work requirements can increase lifetime earnings close to $1 million for individuals who eventually transition off Medicaid.
It’s far better for taxpayers—and would-be Medicaid beneficiaries themselves—to get insurance through their jobs or to accumulate enough income to pay for coverage on their own.
Further, by tightening eligibility for the program, work requirements can make it easy for the program’s legacy beneficiaries to secure care.
Medicaid pays doctors and hospitals less than Medicare or private insurance. So healthcare providers often limit the number of Medicaid patients they’ll see. About 70% of providers accept Medicaid, according to a national survey from 2015. Eighty-five percent accept Medicare, and 90% private insurance.
Expanding Medicaid has created additional competition for scarce appointments. That can mean legacy beneficiaries have to wait longer than they would have pre-Obamacare.
States’ limited resources—and the higher payments they receive from the federal government for expansion enrollees—can cause them to de-emphasize the needs of disabled enrollees, for whom they bear more of the cost. A study from the Foundation for Government Accountability found that nearly 250,000 disabled individuals were on waiting lists for Medicaid care as of 2016 in states that had expanded the program to able-bodied people.
Other government programs for the poor, like the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families, have employed work requirements with great success. When the Clinton administration required single parents to work or seek work to receive TANF, childhood poverty plummeted, and employment soared in the years that followed.
Medicaid was created to help the needy, not those who should be able to take care of themselves. Requiring able-bodied adults to seek employment in exchange for taxpayer-funded health insurance shouldn’t be controversial. It should be common sense.