Beginning in 2027 working age adults enrolled in Medicaid will face a work requirement. Adult Medicaid recipients in states with 1115 waivers and ACA Medicaid expansion populations will be required to work at least 80 hours a month or engage in other beneficial activities. You can read a summary of federal Medicaid work requirements here.
Advocates for Medicaid expansion claim that most Medicaid recipients already work and adding work requirements will decrease enrollment. They worry that many low-income adults will drop Medicaid coverage if required to prove they work, or show they are looking for work, or performing community service. Indeed, a recent study reported in the New York Times claims that Medicaid work requirements do not increase employment.
A fundamental question is: does it really matter? Is it morally defensible to deny taxpayer-funded health coverage to moderate-income, able-bodied adults who are not working, unwilling to find a job or unwilling to show proof of work? Society makes similar value judgements every day. GoFundMe campaigns to raise money for medical bills are relatively popular, but not very successful. Only about 12% reach their financial goals and 16% raise nothing. An analysis of aggregate donations to medical GoFundMe campaigns over a 5-year period found they only raised about one-quarter of their combined goals. Society apparently picks and chooses who deserves their charity based on a variety of factors.
In business economics there is a concept known as willingness to pay (WTP). It is defined as the most a consumer is willing to pay for a good or service and reflects the perceived value of that good or service to an individual. WTP generally refers to a dollar value but could also be measured in effort. I have told the story many times about my Obamacare policy in 2022. I estimated my share of the premiums at around $200 a month, while my subsidy was supposed to be about double that amount, for a plan with 40% cost-sharing and an $8,000 to $9,000 deductible. In my mind, Obamacare was barely worth $200 a month, providing nothing of value unless something unforeseen happened to me that resulted in a huge hospital bill. In other words, my willingness to pay (for $7,000 Obamacare coverage) was only a fraction of its true cost. It is similar for many Medicaid enrollees. Their willingness to pay does not even rise to the level of going online once a month to fill out a form documenting work activities. When the cost of a service is a multiple of what people are willing to pay (absent a subsidy), that service is perceived as a poor value and therefore a poor use of taxpayer’s money.
Why do many Medicaid enrollees view their coverage as worth less than a nominal effort to maintain coverage? Unsought goods are those goods or services consumers do not know about, do not perceive a need for or would prefer not to buy. The latter includes insurance. Insurance is not a traditional consumer market as it does not provide immediate gratification. Consumers hate buying insurance but worry about a possible loss if they do not. Many Medicaid enrollees in good health may not believe they need the coverage if they are required to make any effort to maintain coverage.
Conclusion: Many enrollees only want Medicaid if they can get it with little to no effort on their part. If an enrollee is unwilling to go thought the motions of even proving part time work, then they do not value their coverage. Even for healthy adults who never see a doctor, Medicaid coverage is not cheap. Most Medicaid coverage is provided through managed care organizations that are paid a monthly fee for each enrollee. If Medicaid enrollees are unwilling to exert any effort to maintain coverage, then the cost would be better spent elsewhere. Most would likely appreciate a community clinic rather than coverage that does not even provide reliable access to a doctor. In that regard, establishing work requirements is a great way to weed out people who do not perceive a need for the expensive coverage.
Read more at NYT: Trump’s Bill Followed Georgia’s Lead on Medicaid
Thanks for perceptive comments, but I would add the following:
1. Most male Medicaid recipients will in fact do just as well in community clinics. However I did not see any money for community clinics.
2. The record keeping requirements for the states are not trivial. But only $400 million was appropriated for all states. Once again we see a decent idea being undercut by Republican stinginess.