The One Big Beautiful Bill Act (OBBBA) established new requirements that Medicaid enrollees must engage in work activities to receive health coverage. This month, the Centers for Medicare and Medicaid Services (CMS) released updated guidance on those requirements.
Research suggests that between 3 and 7 million Medicaid enrollees will lose coverage by 2028 due to these work requirements.
Recently published evidence on the implementation of Medicaid work requirements in Arkansas and Georgia shows that work requirements do, in fact, decrease health insurance coverage, but, contrary to stated policy goals, they do not significantly increase employment rates. Some of the Medicaid coverage loss is caused by procedural errors, not non-compliance with work requirements.
By making policy decisions that prevent health coverage loss caused by increased administrative burden or procedural complications, state leaders can ensure individuals maintain the health and financial benefits of Medicaid.
For a deeper dive into the impact of Medicaid expansion on young children and their families, visit our Clearinghouse.
Work Requirements Decrease Health Coverage and Do Not Increase Employment Rates
A study of Arkansas’ temporary work requirement for adults ages 30 to 49 (studied from June 2018 to March 2019) compared outcomes for those in the relevant age group in Arkansas to other similarly-aged adults in Medicaid expansion states. Eligible adults needed to prove at least 80 hours of work or community engagement activities per month, which is comparable to the federal work requirement in OBBBA.
For the study population, work requirements resulted in:
- A 19% increase in uninsurance rates, including those who lost private coverage (such as qualified health plans received through the Marketplace);
- A 12% decrease in Medicaid coverage;
- No significant impact on employer-sponsored insurance; and
- No significant impact on employment rates.
The study explored how increased uninsurance rates could be caused by a lack of public awareness about new requirements and difficulties using the reporting system. Other elements such as lack of internet access, unstable housing, transportation, and health limitations may have also been contributing factors.
Another study analyzed Georgia’s Pathways to Coverage, a program that expanded Medicaid eligibility to adults ages 19 to 64 with incomes up to 100% of the federal poverty level (FPL) beginning in July 2023. To maintain coverage, eligible adults must prove at least 80 hours of employment or other qualifying activities each month—a requirement that closely mirrors the new federal requirements.
Because Georgia has not expanded Medicaid to adults with incomes up to 138% of the FPL under the Affordable Care Act, the authors compared the state to other non-expansion states and to South Dakota, which had expanded Medicaid the same year without any work requirements. There were no significant results when comparing Georgia to other non-expansion states. However, when compared to South Dakota, Georgia’s work requirements led to:
- An 11.7 percentage point decrease in Medicaid coverage rates;
- No significant impact on uninsurance; and
- No significant impact on employment rates.
Overall, Pathways to Coverage enrolled fewer individuals than expected. An estimated 8,077 Georgians were actively enrolled 2 years into the program, representing 7% of uninsured eligible adults from working households. Additionally, 22% of application denials and 30% of disenrollments were due to procedural issues — not a failure to comply with program work requirements.
State Policy Choices Can Ease Coverage Loss
The evidence summarized above suggests that work requirements do not change people’s ability to work but may impact their ability to receive Medicaid or access health insurance. Loss of insurance coverage can have lasting impacts on health and financial outcomes for individuals and families.
Under new OBBBA policy requirements, some of the expected coverage losses will be due to administrative barriers created by new reporting policies or confusion about who is still eligible for benefits. States are required to implement these new requirements on a tight timeline, and many are already weighing their policy design options. Though there are some provisions of the law that are not open for interpretation, states have some degree of flexibility in implementation.
There are several ways states can use this flexibility to ensure qualified individuals keep their Medicaid coverage, including:
- Decrease the frequency of compliance checks to make it less burdensome for enrollees to provide documentation to prove work, community engagement, or exemptions.
- Opt in to additional exemptions to be more inclusive of the individual struggles and situations that may prevent someone from working. States can make temporary exemptions for individuals based on high unemployment rates in counties, natural disasters, admittance into a hospital or nursing facility, or travel barriers to medical care.
- Automate verification of compliance by using previously collected data to prove compliance or exemptions. For example, school records can be used to prove enrollment. Automation eliminates the need for redundant data collection from individuals.
- Shorten application and renewal look-back periods to make it less burdensome for individuals to maintain coverage. Look-back periods—or the period of time in which individuals are required to show compliance with work requirements before enrollment or renewal—can be shortened from 3 months to 1 month to decrease the amount of documentation required for approval.
- Scale up internal systems to handle the upcoming increase in administrative burden and upfront costs for individuals and the state. Investing in technology, using existing resources from the Centers for Medicare and Medicaid Services (CMS), and ensuring staff are properly prepared may decrease loss of Medicaid coverage due to administrative error.
- Increase public awareness of new requirements and how to prove compliance or exemptions to encourage eligible adults to apply and to help enrolled individuals learn a new reporting system.
It is important to note the OBBBA also states that federal Medicaid matching funds may be taken away from states with error rates higher than 3% beginning in 2029. When restructuring eligibility systems, states must account for documentation processes and possible errors in addition to new work requirements. Therefore, further financial stress is placed on states as policymakers mitigate upfront costs of restructuring in addition to anticipated funding losses.
State leaders have the opportunity to make policy decisions that help individuals with lower incomes continue to receive vital health coverage they qualify for. The Prenatal-to-3 Policy Impact Center is continuing to track the impact of federal Medicaid policy changes and state actions related to implementation.
For a deeper dive into the impact of Medicaid expansion on young children and their families, visit our Clearinghouse.
