Medicaid Work Requirements

Since 1965, Medicaid has developed into one of the largest public health insurance programs in the US, supporting over 80 million low-income Americans. (1) Although many of Medicaid’s broad requirements and structure are determined by the Federal Government, individual state governments may file “Section 1115 waivers” to change how state-level Medicaid programs are organized. (2) One specific use of these waivers by state governments is the creation of Medicaid work requirements; under a work requirement-Medicaid program, Medicaid beneficiaries must verify that they are employed or working to find a job unless they can prove that they are retirement age, pregnant, or have a disability. (3) While on paper this might push Medicaid beneficiaries towards seeking employment, in reality, it primarily decreases insurance enrollment. (3) So, what are work requirements and what does the future look like for unemployed people seeking Medicaid coverage?

From June 2018 to January 2019, the government of Arkansas implemented work requirements for their state Medicaid program; in 2018, over 18,000 individuals lost coverage and about 90% of those who lost coverage were uninsured in 2019 as well. (4) However, this spike in uninsurance was not the result of a failure to meet employment qualifications; about 50% of those with coverage withdrawn lost insurance due to communication errors. (4) In focus groups of affected Arkansas residents, confusion about requirements and difficulties reporting information were some of the most common issues with maintaining Medicaid insurance with the addition of work requirements. (5)

This loss in health insurance stemming from work requirements impacts patients and providers. Patients who relied on regular medical treatment to manage mental health conditions and chronic disease reported difficulty maintaining their quality of life and their day-to-day life, with many reporting difficulty at work. (5) Furthermore, medical providers reported that they might receive less compensation for care provided given the rise in the uninsured population. (5)

Medicaid is an entitlement program, a program wherein everyone who is eligible automatically receives coverage. (6) However, with state-level flexibility in determining Medicaid eligibility, the scope of Medicaid coverage becomes variable and restricted to certain parts of the population. So, who deserves coverage? Or, who has a right to coverage? All Americans or those who are employed?

Entitlement programs (colored in blue) in 2024 constituted a majority of the federal budget, with Medicaid constituting 7% of the total budget or about 14% of total entitlement spending. (7) One of the goals of Medicaid work requirements is to reduce entitlement spending by reducing government payments for health insurance. (8)

However, not only do Medicaid work requirements reduce insurance coverage for low-income Americans who might not be able to purchase private insurance on their own but it also reduces coverage for Americans who meet eligibility requirements. (4, 5, 9) In fact, in 2021, only 9% of insured Medicaid-eligible adults would not meet the employment or exemption criteria often set by work requirements. (9) 

Despite significant pushback over the past several years, Medicaid work requirements have been put back on the ballot and will be a subject of significant debate over the coming years. (10) A 2025 estimate suggests that new legislation would eliminate Medicaid coverage for up to 36 million currently-insured individuals while saving about $120 billion in entitlement spending. (10)

So what is the intent of work requirements? Work requirements attempt to promote fiscal independence by pushing Medicaid beneficiaries towards employment where they may soon obtain employer-sponsored insurance but it also attempts to cut Medicaid spending by eliminating coverage for large swathes of the population. (11) Work requirements not only result in disparities in coverage across states with only a few select states choosing to enact work requirements, but they also create disparities in Medicaid enrollment as different states have different sized populations of beneficiaries at risk of losing coverage. (10, 12)

The question then remains: how do we meet the societally beneficial goals of Medicaid work-requirements (primarily encouraging self-sufficiency) without excluding people from coverage? 

Scott Wetzler and Anthony Coles in 2025 effectively convey the goal of any policy alternative, that “the goal for mandating work requirements as a condition of receiving Medicaid should not be to reduce Medicaid rolls per se but to assist individuals in seeking private employment so that they can better support themselves and thereby not require the Medicaid benefit.” (13) In New York, a new program for TANF, another entitlement program, has been developed to include case management services with job search and placement assistance for “employable individuals” and monitoring to ensure TANF recipients eventually reach self-sufficiency. (13) Ultimately, Medicaid beneficiaries may benefit significantly if employed, but the goal of work requirements should not be to reduce coverage and eliminate benefits, resulting in disparities between states and adverse effects on patients and providers, but to provide supports to encourage insured individuals to seek employment, thus reducing the burden on our fragile health insurance infrastructure.