Understanding the Intersection of Medicaid and Work

Medicaid is the nation’s public health insurance program for people with low incomes. Overall, the Medicaid program covers one in five Americans, including many with complex and costly needs for care. Historically, nonelderly adults without disabilities accounted for a small share of Medicaid enrollees; however, the Affordable Care Act (ACA) expanded coverage to nonelderly adults with income up to 138% FPL, or $16,642 per year for an individual in 2017. As of December 2017, 32 states have implemented the ACA Medicaid expansion. By design, the expansion extended coverage to the working poor (both parents and childless adults), most of whom do not otherwise have access to affordable coverage. While many have gained coverage under the expansion, the majority of Medicaid enrollees are still the “traditional” populations of children, people with disabilities, and the elderly.

Some states and the Trump administration have stated that the ACA Medicaid expansion targets “able-bodied” adults and seek to make Medicaid eligibility contingent on work. Under current law, states cannot impose a work requirement as a condition of Medicaid eligibility, but some states are seeking waiver authority to do so.  These types of waiver requests were denied by the Obama administration, but the Trump administration has indicated a willingness to approve such waivers. This issue brief provides data on the work status of the nearly 25 million non-elderly adults without SSI enrolled in Medicaid (referred to as “Medicaid adults” throughout this brief) to understand the potential implications of work requirement proposals in Medicaid.  Key takeaways include the following:

• Among Medicaid adults (including parents and childless adults — the group targeted by the Medicaid expansion), nearly 8 in 10 live in working families, and a majority are working themselves. Nearly half of working Medicaid enrollees are employed by small firms, and many work in industries with low employer-sponsored insurance offer rates.
• Among the adult Medicaid enrollees who were not working, most report major impediments to their ability to work including illness or disability or care-giving responsibilities.
• While proponents of work requirements say such provisions aim to promote work for those who are not working, these policies could have negative implications on many who are working or exempt from the requirements. For example, coverage for working or exempt enrollees may be at risk if enrollees face administrative obstacles in verifying their work status or documenting an exemption.

Data Findings

Among nonelderly adults with Medicaid coverage—the group of enrollees most likely to be in the workforce—nearly 8 in 10 live in working families, and a majority are working themselves. Because policies around work requirements would be intended to apply to primarily to nonelderly adults without disabilities, we focus this analysis on adults whose eligibility is not based on receipt of Supplemental Security Income (SSI, see methods box for more detail). Data show that among the nearly 25 million non-SSI adults (ages 19-64) enrolled in Medicaid in 2016, 6 in 10 (60%) are working themselves (Figure 1). A larger share, nearly 8 in 10 (79%), are in families with at least one worker, with nearly two-thirds (64%) with a full-time worker and another 14% with a part-time worker; one of the adults in such families may not work, often due to caregiving or other responsibilities.

Because states that expanded Medicaid under the ACA cover adults with family incomes at higher levels than those that did not, adults in Medicaid expansion states are more likely to be in working families or working themselves than those in non-expansion states (Table 1). Adults who are younger, male, Hispanic or Asian were more likely to be working than those who are older, female, or White, Black, or American Indian, respectively (Figure 2 and Table 2). Not surprisingly, adults with more education or better health were more likely to work than others (Figure 3 and Table 2). Perhaps reflecting job market conditions, those living in the South were less likely to work than those in other areas, though similar rates of enrollees in urban and rural areas were working (Table 2). 

Most Medicaid enrollees who work are working full-time for the full year, but their annual incomes are still low enough to qualify for Medicaid. Among adult Medicaid enrollees who work, the majority (51%) worked full-time (at least 35 hours per week) for the entire year (at least 50 weeks during the year) (Table 3). Most of those who work for only part of the year still work for the majority of the year (26 weeks or more). By definition (that is, in order to meet Medicaid eligibility criteria), these individuals are working low-wage jobs. For example, an individual working full-time (40 hours/week) for the full year (52 weeks) at the federal minimum wage would earn an annual salary of just over $15,000 a year, or about 125% of poverty, below the 138% FPL maximum targeted by the ACA Medicaid expansion.

Many Medicaid enrollees working part-time face impediments to finding full-time work.  Among adult Medicaid enrollees who work part-time, many cite economic reasons such as inability to find full-time work (10%) or slack business conditions (11%) as the reason they work part-time versus full-time. Other major reasons are attendance at school (14%) or other family obligations (14%).

Nearly half of working adult Medicaid enrollees are employed by small firms, and many work in industries with low employer-sponsored coverage offer rates.  Working Medicaid enrollees work in firms and industries that often have limited employer-based coverage options. More than four in ten adult Medicaid enrollees who work are employed by small firms with fewer than 50 employees that will not be subject to ACA penalties for not offering coverage (Figure 4). Further, many firms do not offer coverage to part-time workers. Four in ten Medicaid adults who work are employed in industries with historically low insurance rates, such as the agriculture and service industries. A closer look by specific industry shows that one-third of working Medicaid enrollees are employed in ten industries, with one in 10 enrollees working in restaurants or food services (Figure 5). The Medicaid expansion was designed to reach low-income adults left out of the employer-based system, so, it is not surprising that among those who work, most are unlikely to have access to health coverage through a job.

Among the adult Medicaid enrollees who were not working, most report major impediments to their ability to work.  Even though individuals qualifying for Medicaid on the basis of a disability through SSI were excluded from this group, more than one-third of those not working reported that illness or disability was the primary reason for not working. SSI disability criteria are stringent and can take a long time to establish. People can have physical and/or mental health disabilities that interfere with their ability to work, or to work full-time, without those impairments rising to the SSI level of severity. Other analysis indicates that nearly nine in ten (88%) non-SSI Medicaid adults who reports not working due to illness or disability has a functional limitation, and more than two-thirds (67%) have two or more chronic conditions such as arthritis or asthma.

30% of non-working Medicaid adults reported that they did not work because they were taking care of home or family; 15% were in school; 6% were looking for work and another 9% were retired (Figure 6). Women accounted for 62% of Medicaid enrollees who were not working in 2016, and parents with children under the age of 6 accounted for 17%.

Policy Implications

Under current law, states cannot impose a work requirement as a condition of Medicaid eligibility. As with other core requirements, the Medicaid statute sets minimum eligibility standards, and states are able to expand coverage beyond these minimum levels. Prior to the ACA, individuals had to meet not only income and resource requirements but also categorical requirements to be eligible for the program. These categorical requirements provided coverage pathways for adults who were pregnant women or parents as well as individuals with disabilities, but other adults without dependent children were largely excluded from coverage. The ACA was designed to fill in gaps in coverage and effectively eliminate these categorical eligibility requirements by establishing a uniform income threshold for most adults. States are not allowed to impose other eligibility requirements that are not in the law.

Some states have proposed tying Medicaid eligibility to work requirements using waiver authority that may be approved by the Trump Administration. Under Section 1115 of the Social Security Act, the Secretary of HHS can waive certain provisions of Medicaid as long as the Secretary determines that the initiative is a “research and demonstration project” that “is likely to assist in promoting the objectives” of the program. The Obama administration did not approve waivers that would condition Medicaid eligibility on work on the grounds that they did not meet the waiver test to further the purpose of the program which is to provide health coverage. The Trump Administration has indicated a willingness to approve waivers to require work.

Research shows that Medicaid expansion has not negatively affected labor market participation, and some research indicates that Medicaid coverage supports work. A comprehensive review of research on the ACA Medicaid expansion found that there is no significant negative effect of the ACA Medicaid expansion on employment rates and other measures of employment and employee behavior (such as transitions from employment to non-employment, the rate of job switches, transitions from full- to part-time employment, labor force participation, and usual hours worked per week). In addition, focus groups, state studies, and anecdotal reports highlight examples of Medicaid coverage supporting work and helping enrollees transition into new careers. For example, individuals have reported that receiving medication for conditions like asthma or rheumatoid arthritis through Medicaid is critical in supporting their ability to work.  Addressing barriers to work requires adequate funding and supports.  While TANF spending on work activities and supports is critiqued by some as too low, it exceeds estimates of state Medicaid program spending to implement a work requirement.

Implementing work requirements can create administrative complexity and put coverage at risk for eligible enrollees who are working or who may be exempt.  States can incur additional costs and demands on staff, and some eligible people could lose coverage.  While work requirements are intended to promote work among those not working, coverage for those who are working could be at risk if beneficiaries face administrative obstacles in verifying their work status or documenting an exemption.  In addition, some individuals who may be exempt may face challenges in navigating an exemption which could also put coverage at risk.

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