Research & Commentary: States Pursue Work Requirements for Medicaid

Published June 1, 2017

Medicaid expansion has placed a severe financial strain on the budgets of the states that chose to expand under the provisions instituted by the Affordable Care Act (ACA). In several states, lawmakers are offering proposals to roll back or repeal their Medicaid expansion under new plans designed to improve the flawed program.

State lawmakers currently waiting for the federal government to approve health care reforms should instead apply for waivers from the U.S. Department of Health and Human Services to allow for more control over Medicaid programs. Unlike in previous years, when nearly all waivers adding competitive reforms to Medicaid were rejected under the Obama administration, the current administration has stated it will approve reform-minded Medicaid changes.

One area of reform that many states are beginning to consider is the creation of work requirements for Medicaid beneficiaries. Implementing work requirements is a proven way to ensure recipients take a step toward self-sufficiency rather than become permanently dependent on government aid.

In The Heartland Institute’s 2015 Welfare Reform Report Card, the authors argue encouraging work affects more than just household income: “Research has shown that requiring work as a condition of receiving cash welfare isn’t something the system does to someone, but rather something done for someone.”

Several states, including Arizona, Arkansas, Florida, Indiana, Kentucky, Maine, and Ohio, are in the process of crafting or submitting waivers from the Centers for Medicare and Medicaid Services (CMS) for Medicaid overhauls that would include work requirements.

For instance, Indiana recently announced its intention to ask CMS for permission to add a work requirement for Medicaid beneficiaries. Under Indiana’s plan, enrollees in the Healthy Indiana Plan would have to be employed or searching for work in order to be eligible for the program. The new requirements would require enrollees to work on average 20 hours per week, be enrolled in school full time or part time, or participate in a job-search and training program. Similarly, Arkansas, the originator of private-option model that many states used to expand their Medicaid programs, has also included work requirement in its recent Medicaid expansion rollback.

Work requirements have proven to be successful in the past when introduced in other entitlement programs. They reduce poverty by encouraging work and raising self-reliance. The new work requirements now being considered by states are modeled based on methods that proved to be very effective when they were included in the welfare reforms of the 1990s. In a study examining the effect the 1990s welfare reforms had on poverty, the Manhattan Institute found the inclusion of work requirements led to substantial reductions in poverty nationwide.

In a 2017 paper, Ben Gitis and Tara O’Neill Hayes of the American Action Forum outlined three examples of successful work requirement reforms: successful work requirements implemented under the Temporary Assistance for Needy Families (TANF) program, which increased single-mother labor-force participation and lowered single-mother and child poverty rates; the enforcement of time-limit restrictions in 2014 for receiving unemployment compensation, which resulted in 2.1 million new jobs; and the Earned Income Tax Credit, a highly effective safety-net program that effectively requires work and has kept 6.5 million people from living in poverty.

Implementing Medicaid work requirements would be a good first step for Medicaid-expansion and non-expansion states toward helping to limit the rising costs of Medicaid.

The following documents examine Medicaid reform in greater detail.

Research & Commentary: Why Arkansas’ Medicaid Rollback Could Be a Model for Expansion States–commentary-why-arkansas-medicaid-rollback-could-be-a-model-for-expansion-states?source=policybot
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines Arkansas’ rollback of its Medicaid expansion program and discusses how other states could follow its lead. “States that have not expanded should avoid doing so, but for states that have expanded Medicaid, Arkansas’ reforms could be a good model for limiting the growth and cost of Medicaid expansion. Other states should take advantage of the waiver process while there is an administration in the White House willing to approve reform-minded Medicaid changes,” wrote Glans.

The Value of Introducing Work Requirements to Medicaid
Ben Gitis and Tara O’Neill Hayes of the American Action Forum examine the value of work requirements and argue more work requirements are needed in other safety-net programs, including in Medicaid.

Poverty After Welfare Reform
In this Manhattan Institute study, Scott Winship examines the effect of the welfare reforms implemented in the 1990s on poverty: “Deep child poverty was as low in 2014 as it had been since at least 1979 after including refundable tax credits and noncash benefits (other than health coverage) in income, counting household heads’ cohabiting partners as family, and applying the best cost-of-living adjustment to the poverty line. Adding health benefits indicates that deep child poverty was lower by 0.3 percentage points in 2014 than in 1996, and lower than any other year going back to 1979,” wrote Winship.

The Personal Health Care Safety Net Medicaid Fix
This article by Justin Haskins, Michael Hamilton, and S.T. Karnick of The Heartland Institute outlines a proposed reform plan for Medicaid, the Personal Health Care Safety Net Medicaid Fix. The authors say their Medicaid Fix would expand patient choice and give each Medicaid enrollee real money, not false promises, in the form of a personal safety net that would empower even the poorest of families to take care of itself and give more than 70 million Americans access to the private health insurance market.

Government Report Finds Obamacare Medicaid Enrollees Much More Expensive than Expected – 75a85aba2dd0
Brian Blase of the Mercatus Center at George Mason University wrote in Forbes the costs for newly eligible adults were not decreasing as expansion supporters predicted they would. Blase says in a new report, HHS says newly eligible adult Medicaid enrollees cost about 23 percent more than the Medicaid enrollees who were eligible prior to expansion.

The Oregon Experiment—Effects of Medicaid on Clinical Outcomes–effects-of-medicaid-on-clinical-outcomes?source=policybot
This article from The New England Journal of Medicine examines Medicaid outcomes in Oregon. Oregon gave researchers the opportunity to study the effects of being enrolled in Medicaid (compared to being uninsured) based on data from a randomized controlled trial, the “gold standard” of scientific research. The results showed no improvement in health for enrollees, but it did reveal better financial protections for patients and increased medical spending.

Why States Should Not Expand Medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington, DC greater control over spending to better fit coverage expansion to states’ needs, resources, and budgets.

Effect of Medicaid Coverage on ED Use – Further Evidence from Oregon’s Experiment
Amy Finkelstein, Sarah Taubman, Heidi Allen, Bill Wright, and Katherine Baicker examine the effect Medicaid coverage has on emergency room use. They found people enrolled in Medicaid significantly increase their emergency room visits for around two years after they first sign up. “For policymakers deliberating about Medicaid expansions, our results, which draw on the strength of a randomized, controlled design, suggest that newly insured people will most likely use more health care across settings – including the [emergency department] and the hospital – for at least 2 years and that expanded coverage is unlikely to drive substantial substitution of office visits for ED use.”


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database. 

If you have any questions about this issue or The Heartland Institute’s website, contact John Nothdurft, The Heartland Institute’s government relations director, at [email protected] or 312/377-4000.