How Medicaid Work Requirements Betray Work and Waste Money

I Oversaw Work Requirements in Michigan - Here is What I Told Congress

This week I testified before the House Budget Committee about what Congress should be thinking as they consider adding new work requirements for Medicaid and SNAP. I led Michigan’s implementation of Medicaid work requirements until they were blocked in court, then worked in the Biden Administration to reduce administrative burdens. With a few revisions, here are my remarks:

Work is central to economic security, civic standing, and the sense of self-worth. Yet H.R. 1’s Medicaid and SNAP provisions will force working people into a bureaucratic maze that prevents them from working, wastes their time, and hurts their health. Rather than fight waste, the law creates waste.

Consider the following. About two-thirds of non-disabled Medicaid recipients are working–often in hard jobs like construction or home health. Some each year will be among the 20 million Americans who lose their jobs. The vast majority want nothing more than to find work again. But under this bill’s community engagement requirement, it is not enough to pound the pavement scour the internet looking for work, even for 40 hours a week. Unemployed individuals need to be in school, doing community service, or in government-approved “work programs.” Such programs have shriveled in recent decades, and even more so since January. So while Americans try to find jobs–which typically takes several months when unemployment is high–they can be cut off health insurance, unless they get themselves into a government-approved program that may not exist.

If ever there was a case of wasteful government overreach that undermines individual initiative and disrespects working people, this is it.

Here’s another example of how “community engagement” gets in the way of work. When Arkansas’ law took effect, Adrian McGonigal was working at a poultry plant and managing his chronic obstructive pulmonary disease. He told the state about his job, but only once – not every month, as the law required. So he lost his insurance. Then he could not afford the medicine for his disease. Then he got sick. Then he lost his job. A few years later, still in his forties, he died.

Multiple studies find that the ACA’s expansion of health insurance saved American lives. Taking insurance from 16 million people will cost American lives.

And Mr. McGonigal was hardly alone as a working American who could not jump through the hoops created by work requirements. When Georgia implemented its program, Kelsey Williams, a part-time store clerk, could not get coverage on a website that crashed three times and a phone tree that kept sending her to voicemail. BeShea Terry, once a booster of the law on a state website, had her coverage canceled by mistake.

You may say, these are growing pains. But anyone who is ordinarily skeptical of the government should not suspend their powers of reason when it comes to policies that send messages that they like. This bill cuts the resources for states while piling new demands on them: linking data systems, overhauling workflows, rewriting forms, standing up call centers, hiring auditors, managing appeals, and more. And implementation must happen in just 18 months. Baked into H.R. 1’s DNA is a future of failure.

The proposal is based on a series of myths. The first is that millions of able-bodied Medicaid and SNAP recipients are doing nothing. Using data from two premier Census studies, more than 90 percent of Medicaid recipients are working, engaged in caregiving, sick or disabled, or in school. In other words, more than 90 percent have a reason for exemption from work requirements under this bill. These people form the great majority of the enormous coverage losses from work requirements. Contrary claims by witnesses today are based on undisclosed data and methods.

The second myth is that work requirements get people into jobs. Study after study finds that work requirements had no effect on employment in Arkansas and ”no effect on employment” in the SNAP program either. People cite welfare reform in the 1990s, but the benefits at issue today are not cash, and unlike welfare reform, this bill offers nothing to help people get or stay in jobs. Today child care, training, and transportation all face deep cuts instead.

The third myth, perhaps the most disturbing, is that the Medicaid expansion has hurt people with disabilities by giving health care to able-bodied adults. This simply is not true. The states that have expanded Medicaid spend more for each individual with disabilities and each child than the states without the Medicaid expansion. The waiting lists for home and community based services are shorter in states with the Medicaid expansion than in states without the Medicaid expansion. Indeed, the three states with the longest waiting lists are Texas, Florida, and South Carolina.

A health care hunger games is not a necessity; it is a choice this bill makes. Fewer people with Medicaid will mean more uncompensated coverage that cuts the funding states can put into home and community based care. The same is true for the cuts in provider taxes and the cost shift to states for SNAP.

There is one group, though, that clearly benefits because of work requirements: government contractors. For timely employment data, states will use The Work Number from Equifax, which sometimes costs over $20 per person per query. Twenty bucks may not sound like much, but with 18 million people subject to reporting as often as once a month, this is a revenue opportunity with eight zeroes, maybe nine. Georgia paid more than $60 million to the leading system integrator for a glitchy system and an ad campaign that netted fewer than 7,500 enrollees out of 240,000 people who might have qualified, a payoff of $8,000 per enrollee. No wonder Jennifer Pahlka calls work requirements “welfare for Deloitte.”

While incumbent vendors thrive, CBO reports the bill will cut resources for the lowest-income Americans by an average of $1600 a year.

Legislators may not believe me today. Maybe in two years they will believe their constituents, mired in red tape and losing health care because of it.

Robert Gordon is the Doris Duke Distinguished Visiting Fellow at the McCourt School of Public Policy at Georgetown University. He previously served as Deputy Assistant to the President for Economic Mobility at the Domestic Policy Council of the White House, Assistant Secretary for Financial Resources and Chief Financial Officer at the Department of Health and Human Services, and the director of the Department of Health & Human Services for the State of Michigan