Health insurance for 600,000 Americans at stake in debt ceiling debate

The health insurance of 600,000 Americans is hanging in the balance as part of last-minute negotiations to raise the U.S. debt ceiling.

House Republicans are pushing to include beefed-up work requirements for recipients of federal welfare — now called Temporary Assistance for Needy Families — the Supplemental Nutrition Assistance Program (SNAP) and Medicaid as part of a debt ceiling deal with the White House.

“We can’t be spending more money next year. We have to spend less than we spent the year before. It’s pretty easy,” Speaker Kevin McCarthy (R-Calif.) said Friday.

Under the GOP proposal, 600,000 Americans — mostly low- and moderate-income people who are capable of working and are between 19 and 56 years old — would lose their health care after being kicked out of federal Medicaid funding, according to a Congressional Budget Office analysis from April.

That would save the government $109 billion over the next decade, the CBO estimated, which is just a fraction of the $32 trillion in federal debt amassed by Republican- and Democratic-led administrations.

The White House had repeatedly written off raising the debt ceiling as nonnegotiable before giving in to Republican demands for talks ahead of a potential June 1 run-out-of-money date.

There’s a good chance the people who are about to lose Medicaid coverage, welfare, or SNAP benefits won’t even know they’ve been booted out of these federal programs until it’s too late.

Arkansas approved work requirements for Medicaid in 2017, resulting in tens of thousands of people losing coverage. Legal Aid of Arkansas attorney Trevor Hawkins started canvassing his state to let people know their lives were about to change.

He told The Hill the people he met on the road had no idea what was coming.

“Most people didn’t realize these work requirements were a thing until they started getting notices that there were problems,” he said. “They were getting marks of not complying, but it was just because they didn’t know about it.”

“I literally traveled the whole state, talking to people in libraries, gas stations, barber shops — you name it. I spread flyers all across the state,” he said. “It was a hard time on me personally, just kind of seeing how this was affecting people, doing everything I could to try to spread the word.”

Treda Robinson, a working Arkansas resident who nearly lost her health insurance because of the work requirement law and ended up bringing a lawsuit against the state, said she would have died if she’d lost her coverage because she had a tumor she needed to have removed that was associated with her anemia.

“I would have died. The tumor was causing me to bleed, and it was making my blood count really low,” she told The Hill in an interview. “If I had lost my insurance at that time, how was I going to be able to go to the doctor to even know what was going on with me? Those appointments were $300 and $400 alone.”

Arkansas’s work requirements officially dropped around 18,000 people from their health insurance, but that number is likely significantly higher due to the selective way the state actually tracks the numbers, Hawkins said.

However many people ended up losing coverage in Arkansas, the total amounts to just a fraction of the number of people who will lose coverage on the national level.

While Republicans and some Democrats have defended work requirements as compelling people who receive government benefits to work for greater levels of remuneration, research out of the Harvard T.H. Chan School of Public Health has shown that in practice, the requirements in Arkansas did not promote employment.

“Work requirements did not increase employment over eighteen months of follow-up,” the researchers concluded, adding that “awareness of the work requirements remained poor, with more than 70 percent of Arkansans unsure whether the policy was in effect.”

The proposed law is viewed by many researchers as simply a mechanism by which to remove people from government programs and not as a way to encourage people to earn a wage.

As such, the requirements should not be thought of as a “work requirement” so much as a “paperwork requirement,” they say.

“If the goal is to get people who can work into work, the way that this goes about that is saying, ‘Prove it.’ That’s very different from checking on them using the excellent administrative data that many state governments already have,” said Kathryn Anne Edwards, an economist and public policy analyst, in an interview with The Hill.

“It puts the burden of proof on them, and one result that we know this will have is that a lot of people will lose benefits,” Edwards said.

This could be a good outcome if the onerous paperwork prompts Medicaid recipients to find a high-earning job that then makes them ineligible for the program.

“But that is a very rosy picture that we don’t have any evidence to support,” Edwards said. “Instead, it results in people losing benefits.”

The GOP legislation passed in the House does “whenever possible, prioritize the utilization of existing databases or other verification measures” over formally reported work requirements, but experts say this language has little chance of being realized practically.

“Outside of substantial efforts to regularize federal databases to be able to talk to each other, work requirements are going to continue to function as they have in the past,” said Matt Darling, an employment policy fellow at the Niskanen Center, a Washington think tank.

Work requirements, Darling said, are a “program that fails to get people into work while dropping people from Medicaid if they do not fill out the paperwork.”

The Republican targeting of welfare and national health insurance programs comes in the wake of massive tax cut packages passed during the past two Republican administrations that added substantially to the U.S. deficit.

Following the cancellation of the expanded child tax credit in 2022, which lifted millions of American children out of poverty, policy analysts are more frequently noting the lack of political consequences for targeting programs that are geared toward poor and lower-income Americans.

“The poverty rate has remained essentially unchanged for the past 40 years, so I don’t know if [targeting the poor] is necessarily a bad political strategy,” Edwards said.

“It’s not like I can say that there are a lot of bad political outcomes for people who don’t help poor people. We do it all the time.” 

Despite regularly arguing a default on U.S. debt would result in an economic catastrophe, the Biden administration hasn’t seriously pursued any legal workarounds.

While progressive Democratic lawmakers are urging Biden to surmount Republican demands for cuts to programs that help low-income Americans, the White House has so far stuck to negotiations with House Republicans.

Such alternatives include proposals to mint additional currency for the express purpose of canceling or reducing the U.S. debt level below its current maximum level.

Biden has expressed a willingness to invoke the 14th Amendment of the Constitution, but U.S. courts and global financial markets may not accept such workarounds.