Research Update: It’s Simple—Medicaid Helps People Work

My colleagues have been analyzing the highly damaging Medicaid work reporting requirement provisions of the House-passed debt ceiling bill crafted by Speaker McCarthy, including how it would likely harm people with disabilities and parents.

There is an overwhelming stack of evidence showing that work requirements are a terrible idea: they don’t actually improve employment rates, they will lead to serious coverage losses, and they are overly burdensome for enrollees, contractors, courts, and state and federal governments. According to the Congressional Budget Office (CBO), the McCarthy work reporting requirements would have a negligible effect on employment status or hours worked by people who would be subject to the work requirements” and lead to 1.5 million low-income people losing their Medicaid coverage, with an estimated 600,000 ending up uninsured. And it’s likely that CBO is significantly understating the adverse impact.  What does actually help low-income individuals work? Medicaid.

Most Medicaid enrollees are already working, or have a disability or caregiving responsibilities. When excluding adults who qualified for Medicaid on the basis of disability, the Kaiser Family Foundation (KFF) estimates that more than 61% of adult Medicaid beneficiaries work, with another 30% not working because of school attendance, a disability, or caregiving responsibilities.

Enrollees more likely to be working in expansion states. A recent ASPE study found that a higher share of enrollees who lived in states that have expanded Medicaid were employed compared to those in states that haven’t—44% to 37%. This is consistent with studies of the Medicaid expansion in Ohio and Michigan, where expansion enrollees reported that their new Medicaid coverage made it easier to look for a job, to continue working, and to do their job better. Medicaid expansion also increased employment in both states (the share of working enrollees increased by about 15% in Ohio and the share who were employed or enrolled in school increased by about 10% in Michigan). In contrast, research clearly shows that work reporting requirements do not increase employment, whether in SNAP, TANF, or Medicaid.

Part of the reason Medicaid expansion helps workers is likely because healthier people make for better workers. Increased access to screenings (including behavioral health screenings), prescriptions, and treatment for chronic conditions through Medicaid coverage can help workers manage their health and get or keep their job. Indeed, KFF estimates that enrollees in “excellent/very good” health are more than 1.5 times more likely to be working than those in “poor” health (69% vs. 42%). Adults with disabilities are also significantly more likely to be employed in expansion states compared to non-expansion states.

Another way Medicaid expansion encourages work is by actually allowing people to make some money without losing their Medicaid coverage.  Working full-time at the federal minimum wage produces earnings of about $12,700 per year. That’s below the poverty level of $14,580 for a single adult in 2023 — about 87 percent — but would still disqualify low-income parents from Medicaid coverage in almost every one of the remaining 10 states that have yet to adopt expansion as many non-expansion states cover parents at one-fifth of the federal poverty level or lower (In comparison, Medicaid eligibility in expansion states equals 138% of the federal poverty level). A parent in a family of 3 could earn far too much to qualify for Medicaid in Alabama, Florida, Mississippi, and Texas even just working part-time.

Medicaid is a critical source of coverage for workers. Research shows that people with Medicaid coverage tend to work in industries like retail, service and hospitality, health care and social assistance, manufacturing, and construction (see ASPE and KFF). Lower-wage workers in jobs in these sectors are less likely to be offered and to enroll in employer-sponsored insurance (ESI), as are part-time workers and employees of smaller firms (45% of enrollees work in firms with fewer than 50 employees). Furthermore, these kinds of jobs may be seasonal or have unstable hours or irregular scheduling that can make it hard for a worker to stay eligible for ESI even if their job does offer it. Our series of low-wage worker factsheets also shows that, in the absence of Medicaid expansion to help cover these workers, many go uninsured.

The bottom line. Research consistently finds that access to Medicaid can support workers and employment more broadly, and that Medicaid enrollees are mostly already working (or live in a working family), or they may have a disability or are caring for children or other family members. Moreover, the millions of eligible people who could lose coverage because of difficulties keeping up with a work reporting requirement will likely experience worse health outcomes as they become uninsured, which  could keep them out of the labor force (and raise uncompensated care costs). Work reporting requirements do not, will not, and cannot support low-income workers. Medicaid coverage, however, can—if we don’t make it harder for low-income people to enroll in and retain it.

Aubrianna Osorio is a Research Manager at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.