Data proves that Medicaid needs work requirements

Lost in the current debate over imposing “work requirements” for Medicaid eligibility has been how such requirements might actually benefit recipients and what “work-free Medicaid” actually costs them. It is time for states to reassess those true costs and benefits.

When the Medicaid expansion under the Affordable Care Act (ACA) added healthy, able-bodied adults without dependent children to the list of beneficiaries, policymakers overlooked the substantial price paid by these recipients who, as the Congressional Budget Office once forecasted, forego hourly wages and earnings in order to maintain their Medicaid eligibility. Without a work requirement for able-bodied adults to receive Medicaid, studies have shown that the program tacitly encourages such recipients to stay home and not go to work. And, as it turns out, Medicaid’s non-work incentive has some not-so-healthy consequences.

{mosads}In Healthy and Working: Benefits of Work Requirements for Medicaid Recipients, we explain that healthy and single Medicaid recipients working less than 20 hours per week, afraid to work more at the risk of losing their benefits, may actually sacrifice hundreds of thousands of dollars in earnings over their lifetime — more than $212,000 for women and more than $323,000 for men. We even found that those who would start on Medicaid but continue to work until they leave the Medicaid program altogether stand to earn nearly a million dollars more over their working years than if they had limited their work and simply remained on Medicaid.  

Such significant lost earnings should not be terribly surprising. Work experience and time in the workforce are key factors that often determine how much employees are paid. Time on the job makes employees more knowledgeable, more skilled, more qualified, more valuable to current employers and more marketable to future ones.

Conversely, those who leave the workforce for any extended period diminish their job skills, become less marketable and attractive to employers and find it harder to find new work the longer they stay at home. State policymakers know this, which is why states restrict how long able-bodied adults may collect state-funded unemployment insurance — to encourage healthy workers to go back to work. And states participating in the ACA’s Medicaid expansion should consider adopting work requirements for new, healthy working-age Medicaid enrollees for precisely the same reasons.

Adopting work and “community engagement” requirements, such as education and job training, is nothing new. Republicans and Democrats both know that such requirements tend to keep government benefits recipients participating in the workforce, helping them to gain valuable work experience and generate more income over the long-term. FDR acknowledged as much during the Great Depression citing “the moral and spiritual value” of work and Bill Clinton made work requirements a key component of welfare reform more than 20 years ago.

In the long-run, requiring able-bodied Medicaid enrollees to work or work more will contribute to their financial and physical well-being. Not only will work requirements yield higher lifetime earnings, but research also shows a strong correlation between income and health. More money can often mean a healthier lifestyle and higher quality health care, which just happen to be Medicaid’s core objectives.

Requiring some recipients to work for their Medicaid benefits will go a long way toward helping the recipients themselves. Creating incentives for healthy, able-bodied adults to return to or remain in the workforce can have significant, lasting effects on the lives — and bank accounts — of countless constituents that should not be lost or forgotten in the fight over Medicaid reform.   

Rea S. Hederman Jr. is the executive director of the Economic Research Center at The Buckeye Institute and vice president of policy. Andrew J. Kidd, Ph.D., is an economist with the Economic Research Center. They are co-authors of Healthy and Working: Benefits of Work Requirements for Medicaid Recipients.