Medicaid: Work Requirements and Federal Threats
Congress is considering significant changes and cuts to safety-net programs like Medicaid. This blog series aims to highlight the critical role Medicaid plays in the lives of millions and provide insights into the policy decisions that could impact its accessibility.
Congress is currently considering slashing federal Medicaid funding by up to $880 billion over the next decade, a move that would require lawmakers to significantly reshape how the program is financed. These changes wouldn’t go into effect overnight, and as of today, no changes to Medicaid funding or benefits have been enacted at the federal level.
Cuts of this magnitude aren’t possible without fundamentally changing how Medicaid currently operates. These changes would have far-reaching consequences for states like Colorado and the people who rely on Medicaid for their care.
Our most recent blog post explored how Medicaid is jointly funded by state and federal governments — and how that shared financing supports Colorado’s economy. In our first blog post in this series, we highlighted Medicaid’s essential role in expanding access to care for Coloradans and improving population health statewide. In this blog post, we’ll take a closer look at one of the policy proposals widely expected to be part of upcoming efforts to reduce federal Medicaid spending: work requirements.
Why are work requirements being considered?
Before the first Trump Administration, no state had ever received federal approval to implement Medicaid work requirements, and legislative efforts to introduce such mandates were unsuccessful. The first Trump Administration, however, approved requests to add Medicaid work requirements in 13 states. The Biden Administration subsequently withdrew all approved work requirement requests by the end of 2021, concluding that they reduced coverage and did not align with Medicaid’s objectives.
In recent months, many Republican leaders have again expressed strong support for work requirements in Medicaid. While Republican lawmakers remain divided on the type and scale of Medicaid cuts they’re willing to support, work requirements have emerged as one of the few areas of near consensus. Legislators advocating for this policy do so under the guise of combating fraud, waste, and abuse in Medicaid, but in practice, work requirements do little to address these concerns. In fact, work requirements would create significant administrative waste and could result in millions of wrongful coverage terminations among members who technically remain eligible.
Policymakers often gloss over the details of work requirements — how they function, who they affect, and how they supposedly save money. In the next section, we’ll break down what work requirements really mean and how they work to reduce federal Medicaid spending.
What are Medicaid work requirements?
Medicaid work requirements make coverage contingent on working, volunteering, or engaging in educational activities for a minimum number of hours. In Georgia, the only state currently enforcing a work requirement, certain members must report their working hours monthly to maintain coverage.
Proponents of these policies claim they encourage employment, decrease dependence on public assistance, foster health, and promote self-sufficiency. These arguments are flawed many times over – most Medicaid members do work, and those who do not would likely qualify for an exemption or face significant barriers to employment1. Moreover, the Congressional Budget Office (CBO) has found that work requirements do not significantly impact the employment status or hours worked by Medicaid members.
Work requirements are rooted in deep-seated stereotypes tied to race, gender, disability status, and income level. These policies ignore the realities of minimum-wage roles without guaranteed hours or long-term job security; the persistent barriers of race and gender-related discrimination; the lack of access to affordable childcare and paid family leave; and the health conditions or caregiving responsibilities that make steady work challenging or unfeasible for many.
Who would be subject to a work requirement?
It’s not yet clear exactly who future work requirements would apply to. While children, older adults, and people with disabilities would likely be exempt, nearly half of all adult Medicaid members nationwide could be subject to new reporting requirements just to keep their coverage. In Colorado, that could mean up to 542,000 people2 — more than one in three current Medicaid members — would be impacted by these rules.
How many Colorado members would no longer be eligible for Medicaid coverage due to a work requirement?
According to estimates, 65% of adults enrolled in Colorado Medicaid are currently working3. National data suggest an additional 29%4 are not working due to school, illness, disability, or caregiving responsibilities — all likely grounds for work requirement exemption. Taken together, over 94% of adult Medicaid members in Colorado should remain eligible under a work requirement, but many are still likely to lose coverage due to complex administrative hurdles and reporting requirements.
Does this policy produce savings?
Given that nearly all Medicaid members are already working or are otherwise exempt from a work requirement, it’s difficult to estimate any meaningful federal savings. In reality, work requirements create federal savings by pushing eligible people off Medicaid, often through wrongful terminations caused by burdensome administrative processes.
Work requirements place costly and time-consuming demands on both Medicaid members and state systems. In states that have implemented such policies, many members struggled to understand the rules and faced challenges navigating complex reporting systems. At the same time, state systems are ill-equipped to track and enforce work requirements, leading to expensive system overhauls and errors. Consequently, these policies often result in coverage terminations not just for the few they’re intended to target, but also for working and exempt individuals — caregivers, students, people with disabilities, and more — who are mistakenly disenrolled. To make matters worse, because work requirements are expensive and labor-intensive to administer, they take away resources that would otherwise be spent on health care services. Under Georgia’s work requirement program, more than 90% of the $26 million spent in the first few months went toward administrative costs and consulting fees, not health care5.
For the small share of Medicaid members who might no longer be eligible for coverage under a work requirement, there’s little evidence that the policy actually encourages employment. Research shows that work requirements decrease federal costs, significantly increase state costs and uninsured rates, and have no effect on the employment status of and hours worked by Medicaid members6. In practice, these policies may even lower rates of employment: many current and former Medicaid members say their health coverage allowed them to stay in jobs or recover from injury or illness and return to work.
Work requirements aren’t designed to address waste, fraud, or abuse. They’re designed to terminate coverage for people who need it.
While work requirements are just one of the many policy proposals under consideration by members of Congress, they illustrate the dangers of cutting Medicaid without fully understanding or acknowledging the consequences. Members of Congress say they don’t intend to take Medicaid coverage away from those who need it, but policies to reduce Medicaid funding would do just that. The rushed nature of the cuts proposed in Congress will result in coverage terminations for low-income families and individuals right when they need it most.
Work requirements, along with other proposed changes — including per capita funding caps, restrictions on state financing mechanisms, and reductions to the federal match rate — would have devastating and long-lasting consequences for Colorado.
Policymakers and the public must understand what’s truly at stake. Medicaid is more than a budget line, it’s a lifeline. As the debate continues, it’s essential to center the people, families, and communities whose lives would be upended by these changes.
Congress must vote against proposed cuts to Medicaid. We ask pro-Medicaid advocates to contact members of Congress to ask them to oppose any potential cuts. What’s at stake isn’t just a budget line; it’s the health and well-being of our communities, our providers, and our state’s economy. The future of Medicaid — and of millions of Coloradans — hangs in the balance.
Resources
- Colorado Fiscal Institute: Medicaid Work Requirements Harm Families and Strain Colorado’s Systems
- cbpp.org/research/health/medicaid-work-requirements-could-put-36-million-people-at-risk-of-losing-health
- kff.org/attachment/fact-sheet-medicaid-state-CO
- kff.org/medicaid/issue-brief/5-key-facts-about-medicaid-work-requirements/
- commonwealthfund.org/blog/2024/few-georgians-are-enrolled-states-medicaid-work-requirement-program#:~:text=School%20of%20Medicine-,Georgia’s%20Medicaid%20work%20requirement%20program%20has%20cost%20the%20state%20at,as%20an%20%E2%80%9Cinnovative%20.%20.%20
- cbo.gov/system/files/2023-04/59109-Pallone.pdf