Medicaid's Community Contribution Demands and the Merit of Employment
In 2024, a significant portion of federal taxpayers' Medicaid spending was directed towards childless, working-age, able-bodied adults who worked 20 hours a week or less. This group accounted for 11 percent of total federal Medicaid spending, with half of working-age adults (age 19-64) on Medicaid falling into this category.
The spending was concentrated in a few states, with California and New York alone accounting for over one third of the total nationwide spending. California and New York cost federal taxpayers $13.5 billion and $6.4 billion, respectively, in 2024.
The new 2025 federal law aims to standardize these requirements nationally, mandating at least 80 hours per month of work or community engagement activities for able-bodied adults without children who are eligible for Medicaid under the Affordable Care Act expansion. Exemptions include pregnant or postpartum individuals, those with disabilities or serious medical conditions, parents/caretakers of children under a certain age, and those facing short-term hardships.
Research and analyses indicate that these requirements do not significantly increase employment, as many enrollees are already working or are exempted due to barriers to employment. Instead, these requirements have been shown to reduce Medicaid enrollment, as some individuals lose coverage after failing to meet the criteria, potentially leading to increased numbers of uninsured people. This reduction in coverage may result in short-term lower Medicaid spending but can shift costs elsewhere, such as emergency healthcare or uncompensated care.
States also incur higher administrative costs to implement and verify compliance with work requirements, increasing state Medicaid program expenses. The newly enacted law allows states to seek waivers to implement more stringent or additional conditions, with some states like Arkansas and Arizona pursuing such approaches.
These state-specific approaches may test the balance between coverage preservation and cost savings but face potential legal and administrative challenges. The federal push to encourage work or community involvement while balancing coverage protections for vulnerable populations continues to be a topic of ongoing debate.
In 2024, among able-bodied adults on Medicaid without children, 44 percent worked less than 20 hours per week, with 88 percent not working at all. The new federal law seeks to address this situation by standardizing work requirements and offering exemptions to protect vulnerable populations.
- In the debate surrounding Medicaid reform, a significant focus is on work requirements and workplace wellness, with the 2025 federal law mandating a minimum of 80 hours per month of work or community engagement for able-bodied adults without children.
- The implementation and verification of these work requirements can result in increased administrative costs for state Medicaid programs, as seen with states like Arkansas and Arizona pursuing more stringent conditions.
- Achieving a balance between cost savings and coverage protection for vulnerable populations, particularly in areas like mental health, health and wellness, and personal finance, remains a crucial aspect of the ongoing discussion regarding Medicaid legislation.
