Economic Impact of Medicaid Work Requirements

Republicans are campaigning for work requirements in order to get Medicaid. According to one report in May: “Between 4.6 million and 5.2 million adults would lose Medicaid coverage in 2026 due to proposed work requirements.” Denying Medicaid does not mean people will not get healthcare if needed. It does mean, hospitals would not be paid as the patient cannot afford to do so. And hospitals have to treat patient who come to them.

“What Is the Economic Impact of Medicaid Work Requirements?” MedCity News

A new report warns, the proposed Medicaid work requirements may greatly limit access to health coverage, lead to substantial economic losses, and fall short of boosting employment.

Report were released last week by the Commonwealth Fund and the George Washington University Milken Institute School of Public Health. It comes as Congress considers federal budget legislation that includes a proposal to require adults ages 19 to 55 without dependents to work in order to be eligible for Medicaid. It’s part of an effort to reduce the federal deficit by creating at least $880 billion in savings over the next decade, and Medicaid is anticipated to take a significant hit.

The researchers found that between 4.6 million and 5.2 million adults could lose Medicaid coverage in 2026 due to work requirements. This would mainly be because of paperwork barriers, rather than an unwillingness to work. The report also highlighted that most adults on Medicaid are either already employed or should qualify for exemptions from work requirements due to factors such as caregiving responsibilities, poor health or school attendance.

Federal Funding

A report noted: Because federal funding is linked to enrollment numbers, many states would face funding cuts as work requirements cause people to lose Medicaid coverage. The 40 states that have expanded Medicaid eligibility, as well as Washington D.C., would lose between $32.9 billion and $45.9 billion in federal funding in 2026, and up to $504 billion over a decade. The remaining 10 states that have not expanded Medicaid would not lose federal funds, the report stated.

Funding Loss

The funding loss would then lead to staffing and service cuts. The researchers estimate that between 322,000 to 449,000 jobs would be eliminated. This includes up to 206,000 healthcare jobs, such as in hospitals, doctor’s offices, clinics and pharmacies. In addition, up to 242,000 jobs in other fields would be lost, including retail, food service and construction.

These job losses would then cause declines in GDP and state and local revenues. Combined state-level GDP could reduce by $43 billion to $59 billion in 2026 because of less spending and economic activity. And governments would receive $3.2 billion to $4.4 billion less in tax revenue due to job and business losses.

“Medicaid is a powerful economic engine. When you cut it, the damage ripples out far beyond the health sector. Our analysis shows that Medicaid work requirements would lead to hundreds of thousands of job losses and state economies losing billions. These cuts would not promote employment. According to Leighton Ku, the lead author and director of the Center for Health Policy Research and professor of health policy and management at GWU’s Milken Institute School of Public Health, in a statement said, “they (cuts) would do the very opposite.

These comments were echoed by Sara R. Collins, Commonwealth Fund senior scholar and vice president for health care coverage and access.

Collins: “Work requirements don’t increase employment, they trigger coverage losses,” They push people out of Medicaid not because they aren’t working, but because they can’t navigate complex paperwork and reporting rules. The result is more uninsured Americans and greater strain on families and the doctors, clinics, and hospitals they depend on.”