Republicans from President Trump on down are trying to hide the ball on how much they want to cut federal Medicaid payments to states and how they would go about doing so. But as my colleague Edwin Park has explained, they are working from the same playbook as they used in 2017 during the first Trump administration. That playbook included giving states the option to require reporting work as a condition of Medicaid eligibility. The debt ceiling legislation that passed the House in 2023 included a harsher, mandatory version of work reporting requirements. And last month, the Co-Chairman of the House DOGE Caucus introduced the 2023 version but expanded its reach to also include adults age 55 to 64.
The empirical case against work reporting requirements is overwhelming. Nearly two-thirds of adults enrolled in Medicaid do work either full-time or part-time. Another thirty percent are not working because of caregiving responsibilities, illness or disability, or because they attend school. Imposing requirements to report work on these adults is not only redundant; it is also self-defeating. As Arkansas demonstrated in 2018, work reporting requirements do not increase employment; they result in loss of Medicaid coverage and the access to health care and protection from medical debt that Medicaid provides. In short, as my colleague Leo Cuello has detailed, they are a terrible idea.
That said, it’s obvious that these data—and the certainty of coverage loss—are not persuasive in some quarters. So, it might be a good idea to take a close look at the version that passed the House in 2023 to see exactly what work reporting requirements could look like. That version is found at section 321 of the Limit, Save, Grow Act, HR. 2811, under the opaque heading “Community Engagement Requirement for Applicable Individuals.” Here are the main elements:
- Work reporting requirements would be strictly defined in statute. Section 321 specifies that, in order to meet the requirements, a non-exempt adult would have to meet one of the following every month: (1) work at least 80 hours or have a monthly income equal to 80 hours at federal minimum wage ($1,420 this year); (2) complete 80 hours of community service; (3) participate in a work program for 80 hours; or (4) report a total of 80 hours of some combination of the above. There’s no language authorizing a state to modify these requirements or authorizing the Secretary of HHS (i.e., CMS) to waive them. One size would fit all.
- Work reporting requirements would be mandatory on all states. Section 321 would prohibit federal matching funds for any state spending on Medicaid services in any month for an individual who does not meet those requirements for “3 or more preceding months” in a calendar year and who does not qualify for an exemption in those months. Exactly how this would be operationalized is unclear. What is not at all ambiguous, however, is that this prohibition would apply in all states, the District of Columbia, Puerto Rico, and the territories.
- Work reporting requirements would not be waivable. As noted, there’s no language in section 321 authorizing CMS to waive any of its requirements on states or individuals. Moreover, CMS would not be able to approve a state request for a section 1115 waiver of any of these requirements. That’s because the requirements are not drafted as a state plan requirement in section 1902(a) of the Social Security Act; they are drafted as a prohibition on federal financial participation in section 1903(i) of the Act, which is not waivable under section 1115 authority.
- Work reporting requirements would apply to all adults age 19 through 55, regardless of eligibility group. While much of the public discussion about work reporting requirements has focused on the so-called “able-bodied” adults in the Medicaid expansion population, the requirements of section 321 are not limited to expansion adults age 19 through 55. They would apply to all adults age 19 through 55 in traditional Medicaid eligibility categories as well. In other words, an adult’s eligibility category would not be a basis for exemption. (CBO estimates that this year 18 million adults will be qualify for Medicaid under traditional eligibility categories and 14 million will qualify under the expansion adult category).
- Exemptions from work reporting requirements are limited. Section 321 specifies seven exemptions. States would not have the authority to add any additional exemptions (say, for good cause) or to remove any that are on the list. One size would fit all. The seven are: (1) physically or mentally unfit for employment as determined by a physician or other medical professional; (2) pregnant (but not post-partum); (3) parent or caretaker of a dependent child; (4) parent or caretaker of an incapacitated person; (5) complying with work requirements under the SNAP program; (6) participating in a drug or alcohol treatment and rehabilitation program; (7) enrolled in an educational program approved by the Secretary at least half time. Individual with disabilities receiving Supplemental Security Income (SSI) benefits are not exempt.
- Work reporting requirements would apply regardless of the unemployment rate in a state. Nothing in section 321 recognizes there is such a thing as a business cycle. As it happens, national and state economies expand and contract, and when they contract, work is harder to find. Section 321 does not provide an exemption for adults living in states, or regions within a state (think American Indian reservations) with high unemployment rates. Nor does it give states (or CMS) the authority to add such an exemption. This puts non-exempt adults in an untenable position during economic downturns, when there is simply little or no work to report in order to keep the Medicaid coverage they need in order to be able to work.
- States would be required to verify compliance with reporting requirements by each adult aged 19 to 55 who is not exempt. Section 321 doesn’t specify what documentation of compliance a state Medicaid agency would have to undertake to avoid making an improper payment. It does, however, require state agencies to “whenever possible, prioritize the utilization of existing databases or other verification measures … prior to seeking additional information from the individual.” In other words, even after checking databases, state Medicaid agencies would have to obtain additional information from the enrollee each month to verify the hours worked. This underscores the lesson of the Arkansas demonstration: disenrollment rates are extremely sensitive to whether a state uses data matching to determine compliance or whether individuals are required to report their work or exemption status. The more individuals who are required to report, the more who will be disenrolled—whether or not they are working.
- States would have the option to disenroll non-exempt adults who do not meet work reporting requirements with no due process. Section 321 does give states one option: to disenroll an adult from Medicaid coverage for any month in which the cost of the adult’s coverage would not be matched by the federal government because of the prohibition on federal financial participation for failure to comply with work reporting requirements. Critically, this option is “Notwithstanding any of the preceding provisions of this subsection.” What would those be? All of the fundamental due process and consumer protections for applicants and beneficiaries that have been in the federal Medicaid statute since 1965. So, if the state agency determines that an enrollee has not complied with the work reporting requirements it can simply terminate the individual’s coverage: no notice, no fair hearing, and no review as to whether the individual could be covered under another eligibility pathway. The trap door metaphor comes to mind.
This quick overview raises far more questions—especially operational ones—than section 321 answers. When would these requirements be effective? How much time would states have to make the necessary changes to their eligibility policies and systems? Crickets. To comply with these requirements, states will need monthly tracking of individual reporting and exemptions. How would the costs of modifying existing IT systems or standing up new ones to administer these requirements be reimbursed? Crickets.
Most states contract with managed care organizations (MCOs) to enroll non-disabled, non-elderly adults on a risk basis. This involves making monthly capitation payments on behalf of enrollees in advance. But under the “3 or more preceding months” standard, states and MCOs may not know until after the fact whether an individual has met their reporting requirement for the month(s) during which they are enrolled in the MCO. For those months during which the individual has not met the requirement, the federal government will not match the capitation payment the state may already have made to the MCO for that individual. Who will bear the shortfall? The state or the MCO? Considering that over 30 million adults—both traditional and expansion eligibles—were enrolled in MCOs in FY 2022—this is not an idle question.
What’s not in question is that the provisions of section 321, if enacted, would result in massive coverage losses. Researchers at the Urban Institute recently modeled what would happen if requirements based on its provisions were implemented in 2026. If the requirements were limited to the expansion adults, coverage losses would range from 4.6 to 5.2 million. If, as in section 321, the requirements were not limited to the expansion population, coverage losses would be “considerably higher.” And, not to put too fine a point on it, increases in the number of uninsured adults resulting from coverage loss are expected to result in “greater unmet needs for health care, rising medical debt, and worse health outcomes” —not to mention the increased financial stress that higher levels of uncompensated care will place on health systems, especially rural hospitals and clinics.