States try to revive Medicaid work requirements, worrying some low-income Americans

More than 70 million Americans who are low-income or disabled have health insurance paid for by the state and federal government called Medicaid. The main qualification currently is that you have to make below a certain income level. But there’s an idea that’s been popular with Republicans – that all those individuals should also be required to work.

While Republicans introduced a bill to create a national work requirement, states have a lot of flexibility to add their own rules. Arkansas and 12 other states got the greenlight to add these work requirements during the first Trump Administration, but after just a few months, courts halted those plans.

Now that Trump is back in the White House, states including Arkansas, Ohio and Arizona are reviving the effort – which concerns some Medicaid patients and advocates.

Patients worry about losing health care 

Summer Neal, 31, relies on a lot of medications to keep her healthy. The Paragould, Arkansas resident suffers from lupus, an auto-immune disease that causes joint pain and leaves her susceptible to frequent illnesses.

“Someone can have a cold and it’ll turn into the flu for me, or pneumonia,” Neal says, “I’ve had COVID 11 times.”

Thanks to Arkansas’ Medicaid, Neal is able to afford her essential doctor visits and medications.

But in December, when Neal went to pick up her prescription to manage pain and inflammation, the pharmacist told her that she no longer had insurance coverage and she owed more than $1,000.

“I was really worried,” Neal recalls, leaving the pharmacy empty handed. “If I don’t have a steroid to keep this inflammation down, the amount of pain that I am in is almost unbearable.”

The situation turned out to be a paperwork error, but it created a two-month nightmare for Neal. She said she ended up delaying paying her rent to afford some medications.

Neal does work now, as a manager at a pizza restaurant, but her income is low enough to qualify for Medicaid. And she worries that if she gets sicker, she could have to stop working — and lose her Medicaid coverage.

That’s because in January, Arkansas Governor Sarah Huckabee Sanders announced plans to reprise the requirement the state tried to institute under the first Trump administration.

Arkansas’ new proposal 

Under current rules, if you are a single adult making about $20,000 a year or less in Arkansas, you can qualify for Medicaid. The proposed rules would add another test – you have to work.

“Most Arkansans work hard to pay for their health insurance, but many of these healthy adults don’t work at all and receive it for free,” Sanders said.

In a statement, she said the state is spending $2.2 billion on Medicaid for more than 200,000 healthy adults and estimated 40% are not working.

The state’s plan this time is to offer those people state-funded help finding a job and, only if they refuse, pause their Medicaid coverage. This is different from their attempt in 2018, where if people didn’t report that they worked 80 hours a month, they would automatically lose health insurance.

“Once this work requirement starts, we will achieve our goal of moving Arkansans off the path of government dependency and on the path to prosperity,” Sanders said when announcing the program.

However, multiple studies show that more than 90 percent of eligible adults on Medicaid nationally are already working, or are exempt from the requirement because they have disabilities, are in school or are caregiving.

Arkansas could get the signoff from the federal government any day now. Ohio and Arizona are waiting on the same approval. Several other states including South Carolina, Idaho and Iowa are also in talks to add their own work rules.

Lessons from Arkansas’ first try

Seven years ago when Arkansas did this under the first Trump administration, a third of the eligible adults, or about 18,000 people, lost coverage in less than a year. Many were working but didn’t follow the complicated monthly process for reporting work. Fixing those mistakes and helping people regain coverage became Legal Aid of Arkansas attorney Trevor Hawkins’ full time job.

“It was my entire day,” Hawkins said, “I was able, for a lot of folks, to help them get their coverage back.”

However, many others didn’t regain Medicaid. Just a tenth of those who lost coverage had it the next year.

In 2019, a federal judge halted the state’s program, ruling that it was illegal and didn’t address Medicaid’s core purpose of providing medical coverage to low-income individuals.

Research from the Harvard T.H. Chan School of Public Health also found that the rules didn’t result in more work.

“It’s been tested,” Hawkins said about the work requirement program, “It’s a bad investment.”

In order to implement these work rules, states also have to create new tracking and reporting systems which can be expensive to set up and run.

‘Just another way to cut Medicaid’

Proponents of work requirements argue that the policy will help lift low-income individuals out of poverty by motivating them to get jobs.

But Gideon Lukens, a senior fellow at the Center for Budget and Policy Priorities, believes these work requirements are simply a tactic to shrink Medicaid enrollment.

The Congressional Budget Office has estimated that imposing work requirements nationwide could save over $100 billion over the next decade – by excluding more people from Medicaid so the government doesn’t have to pay for their medications and care.

Lukens says, “When you have people losing coverage, yes, you do pay less money, but you also have extreme hardship.”

States with limited Medicaid coverage have double the rate of people without insurance, compared with states that have expanded Medicaid coverage.

Right now, states are the ones requesting approval for these work changes, but if the proposal from House Republicans for a national work requirement were to pass, The Urban Institute and Robert Wood Johnson Foundation estimate that up to 5 million people could lose coverage.