As discussed in our overview of H.R. 1, the budget reconciliation bill passed by Congress and signed by President Trump, the new law includes a harmful new work reporting requirement for Medicaid. The Congressional Budget Office estimates this work reporting requirement will result in a $326 billion cut in federal funding for states and lead to 5.3 million people losing their health insurance. As we have explained before, the work reporting requirement has nothing to do with encouraging people to work or even punishing people who don’t work; instead, it punishes workers and people with disabilities and others who can’t get through the reporting requirements.
We will be diving into the new work reporting requirements in additional blogs in the coming months. But for this blog, let’s cover four major things to understand about the new work reporting requirements and how they will sow chaos, costs, and damage in Medicaid.
First, the new work reporting requirements are mandatory for states. Under H.R. 1, the federal government is forcing every state to use a work reporting requirement in their state Medicaid program, even if the state doesn’t want to do it. The majority of states have never been interested in imposing work reporting requirements, and would never do them if not compelled by the federal government.
Second, it will be a massive cost and burden for states to implement the work reporting requirements being forced upon them. They will have to build very complex and expensive state eligibility systems to collect and check information for work reporting requirement compliance, and they will need to train and hire additional state staff to respond to enrollees and do the eligibility checks. The Government Accountability Office noted that the estimated cost of implementing work reporting requirements in Kentucky alone was over $270 million dollars. Millions of state dollars, along with millions of federal matching dollars, will be paid out to consultants who will reap large profits building this morass of work reporting requirement bureaucracy for desperate states.
Third, the federal government has dropped this giant burden on states without giving them sufficient time, information, or resources to actually get the job done. States have less than a year and a half to build a system that would normally take numerous years to build. But wait, it gets worse: States won’t actually get the regulations that provide the specifications of the work reporting requirements until as late as June 2026 – just seven months before they need to go live with the new systems.
Fourth and finally, of course, there is the most important fact of all – 5.3 million people will lose their health insurance. Most of those people will be workers, who didn’t even know about or couldn’t figure out how to satisfy the bureaucratic work reporting requirement. But there will also be people with disabilities, students, and others who get caught up in the red tape and lose their health insurance.
So just think about what this means if you put it altogether: the federal government will be forcing states to build an incredibly expensive and time-consuming new layer of bureaucracy, that most states do not want to build, much less pay for, in order to force the states to take health insurance away from millions of people that the states do not want to take health insurance away from. It’s like a hospital being forced to build an expensive moat that will keep out the very patients it is trying to serve. And the timing will be disastrous for states, as they will have to waste so much effort and resources on implementing work reporting requirements that it will decrease their capacity to address other serious problems they are currently facing, including budget crises and administrative burdens related to other parts of H.R. 1.
The implementation of these work reporting requirements will be a critical issue for states in the coming years and we will be blogging more about this in the near future.