Speaker McCarthy Blames Medicaid for the Labor Shortage! Huh??

“Right now there are more job openings than people who are looking for jobs. You know why? It’s in part because the Biden Administration weakened work requirements. Incentives matter.”

While that quote sounds like a line from a Saturday Night Live skit, it’s actually from Speaker McCarthy’s speech today on Wall Street outlining the House Republican plan to only raise the debt ceiling in exchange for damaging policies that restrict access to Medicaid and SNAP.

We have witnessed many (fortunately) failed efforts by Republicans in Congress to impose damaging Medicaid cuts and radically alter Medicaid’s financing structure. This latest one unveiled today is a rhetorical doozy though – pushing Medicaid (and SNAP) work reporting requirements by blaming the country’s labor shortage on the Biden Administration’s rescission of Section 1115 Medicaid work requirements – a policy area we have followed very closely at Georgetown CCF. The argument about President Biden changing the work incentive structures when he took office is patently absurd — because in fact there were no Medicaid work requirements in place when he took office.

In reality, according to Federal Reserve Chair Jerome Powell, there are several factors behind the ongoing worker shortage.  There is lower workforce participation due to the pandemic, including not just current illnesses but also the impact of long-COVID, and higher-than-expected retirement rates resulting from COVID concerns and difficulty in finding new employment after pandemic-driven job losses.  There is also slower growth in the working age population, driven by pandemic-related deaths and a significant drop in net immigration. It is also likely that the lack of affordable childcare during the pandemic was a substantial factor.

 As readers of the Say Ahhh! blog know, the Trump Administration was very fond of encouraging states to impose restrictions to accessing Medicaid through Section 1115 waivers – “work” requirements just being one of them (lockouts, arbitrary time limits, and high premiums being other examples). However, only one state, Arkansas, actually implemented work requirements for a short period in 2018, during which 18,000 people lost Medicaid before a federal court intervened to stop it.

The policy itself was an abject failure – driving up the uninsured rate with no evidence that it reduced unemployment. Moreover, even in the one example of Medicaid work requirements going into effect, the supposed incentives were not well communicated or understood with 94% of Arkansans giving the wrong answer as to whether or not Medicaid work requirements were in place in 2019. The same study found other adverse outcomes such as delayed care, increased medical debt and diminished medication adherence. (Say Ahhh! readers will recall how miscommunication about the work requirements led one Arkansan to lose his job at a chicken plant when he could no longer afford the medication he needed to manage his COPD after the state dropped him from Medicaid.)

The last failed attempt to cut and restructure Medicaid was when newly elected President Trump and the Republican Congress in 2017 tried to repeal the Affordable Care Act and, while they were in the neighborhood, convert Medicaid to block grants and per capita caps. That didn’t end well for them, as we all know.

This time the stakes couldn’t be higher – the Speaker indicated that he plans to try to tie the imposition of Medicaid work reporting requirements to lifting the debt ceiling which, if not accomplished, will mean catastrophic default on the nation’s debt and plunging the country, and likely the world, into economic chaos. Oh, the places they will go…. just to cut Medicaid.