1.7M Beneficiaries May Lose Coverage Under Medicaid Work Requirements

Around 1.7 million Medicaid beneficiaries could potentially lose coverage and $10.3 billion in spending would shift from federal to state governments if Medicaid work requirements were implemented, an issue brief from the Kaiser Family Foundation (KFF) found.

In April 2023, the House of Representatives passed a debt ceiling bill that would implement work requirements for Medicaid beneficiaries aged 19 to 55. These beneficiaries would have to work or participate in community service or job training for at least 80 hours per month or their Medicaid coverage could be compromised.

Certain beneficiaries are exempt from work requirements, including those physically or mentally unfit for employment, pregnant individuals, parents or caretakers of a dependent child or incapacitated person, those enrolled in school at least half time, and those participating in a drug or alcohol treatment or rehabilitation program.

If non-exempt beneficiaries do not meet the work requirements for three or more months, the federal government would stop paying its share of Medicaid expenses. States could either disenroll these beneficiaries or continue their coverage and pay 100 percent of the costs.

The Congressional Budget Office (CBO) estimated that 15 million beneficiaries each year would be subject to the new requirements if work requirements were implemented. Around 1.5 million beneficiaries would lose eligibility for federal funding, leading to $109 billion in federal savings.

Around 60 percent, or 900,000 of those beneficiaries, would live in states that would continue coverage with state-only funds, while the remaining 600,000 people would lose Medicaid coverage, CBO projected.

CBO also estimated that state costs would increase by $65 billion between 2023 and 2033, or $6.5 billion per year, in states that continue coverage without federal funds.

Assuming that the work requirements would only apply in states that have expanded Medicaid, KFF projected that 1.7 million beneficiaries could lose eligibility for federal matching funds if the policy is implemented in 2024.

It is unknown whether any states would opt to maintain coverage without federal funding. KFF estimated the coverage losses in each state based on CBO’s projected rate and what it would cost each state to prevent losses.

If all states chose to maintain coverage for beneficiaries, $10.3 billion in Medicaid spending would shift from federal to state governments in 2024. Eleven states would have to pay over $350 million to maintain coverage for people ineligible for federal funding.

The costs to states would equal 90 percent of total spending for affected beneficiaries, the brief noted.

A report from the US Department of Health and Human Services (HHS) predicted that 21 million individuals could face barriers to Medicaid coverage if work requirements were implemented.

In California alone, around 4 million beneficiaries could potentially lose Medicaid coverage, while 1.2 million people in New York are at risk of coverage loss.

While the debt ceiling bill passed in the Republican-controlled House, it is not expected to pass in the Senate.