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The debt ceiling debate could put health insurance in jeopardy for millions

A Republican plan to link Medicaid coverage to certain work requirements could result in an estimated 1.5 million people losing health insurance coverage, according to the CBO.
Doctor examining patient with stethoscope
Thomas Barwick / Getty Images

WASHINGTON — As Republicans and Democrats debate a plan to raise the nation’s debt ceiling, millions of Americans who rely on Medicaid for their health insurance have wound up in the crosshairs. 

Republicans and Democrats appear to be at a stalemate over a GOP proposal to tie eligibility for Medicaid, the government-funded health insurance program for low-income and disabled adults, to a certain number of hours worked each month. For Republicans, the plan is part of a decadeslong push to link federal assistance to work requirements, while Democrats say the move would unfairly strip people of their health coverage and push more Americans into poverty.

Under the Republican plan, included in a bill passed by the House last month, Medicaid recipients would have to document 80 hours a month of work, which at the federal minimum wage would amount to a minimum of $580 a month in income, or log hours doing community service or participating in a work training program. Recipients would lose their coverage if they don't meet the hourly or monthly income requirements for three consecutive months during the year. 

A number of groups would be exempt, including people under 19 years old or over 56, those who are going to school at least part-time or who are pregnant or deemed by a doctor to be physically or mentally “unfit for employment.” Also exempt from the work requirement would be people participating in a drug or alcohol program and those caring for a dependent child or an “incapacitated person.”

The work requirement would apply to about 15 million of the 86 million people receiving Medicaid coverage who would either have to meet the mandated hours or apply for an exemption, the Congressional Budget Office estimated last month. Among that group, the CBO estimated that 1.5 million would likely become ineligible for federal Medicaid dollars under the Republican plan, lowering the costs of the program by $109 billion over 10 years. 

While those individuals wouldn’t qualify for federal Medicaid funding, states would have the option to use their own dollars to keep people in the program, something the CBO estimates a number of states would do, maintaining coverage for 900,000 people at a cost of about $65 billion over 10 years. But the remaining 600,000 living in states not expected to step in would lose their health insurance entirely, the CBO said.

For those who lose coverage, they will still need medical care and the costs would have to be borne elsewhere in the health care system, like by hospitals or health clinics providing free or low-cost care, physician groups and health economists said. Six major medical groups, including the American Academy of Pediatrics and the American Psychiatric Association, issued a statement opposing Medicaid work requirements, arguing it would increase medical debt for patients and add barriers to care while driving up costs for states and not improving employment rates. 

“The health care issues do not go away, they’re still there, and if they’re not addressed initially they can lead to further complications down the line, which will end up costing the health care system even more,” said Tochi Iroku-Malize, a family physician in New York and president of the American Academy of Family Physicians. “Medicaid is critical to ensuring equitable access to care and reducing disparities, and any cuts will exacerbate the health care disparities that we have and jeopardize access to care.”

At the same time, health economists estimate there would be added administrative costs for states that have to set up a system of regularly tracking and monitoring people’s work hours since Medicaid is currently designed only as a health insurance program. 

Republicans have argued that the requirement would drive more people into the workforce, helping with labor shortages, improving people’s overall financial situation and pushing them into jobs with private-employer insurance. Conservative groups have attributed welfare reforms in the 1990s and other state-led work requirements for food and income assistance with a rise in employment by single mothers and lower child poverty rates.

“What work requirements actually do, help people get a job. Every data point shows that, and it helps people move forward,” said House Speaker Kevin McCarthy, R-Calif., on Tuesday. He has said including those work provisions in a debt ceiling bill was a red line for him. 

But there is little evidence to suggest work requirements for Medicaid recipients would have a benefit, and Democrats have said other factors aside from work requirements are largely responsible for improving economic outcomes since they were first put in place during welfare reform in the 1990s. 

Under an Arkansas program enacted in 2018 similar to the Medicaid work requirement being proposed by Republicans, 17,000 people lost coverage while there didn’t appear to be a significant change in the number of hours people were working, in part because more than 95% of those targeted by the policy already met the requirement or should have been exempt, according to a study published in the New England Journal of Medicine. 

The CBO also estimated that the program would do little to drive more people into the workforce, saying it would have a “negligible effect on employment status or hours worked by people who would be subject to the work requirements.” 

The Medicaid proposal doesn’t provide any additional funding for programs to help people get work, like job training or assistance for transportation and child care, and Medicaid dollars can only be used for health-related costs.  

Taking away health insurance could also inhibit the ability to work, past research has found.

“When people lose coverage they still need to get health care,” said Robin Rudowitz, director of the program on Medicaid and the uninsured at KFF, a health research nonprofit. “Often coverage and access to either medications or ongoing treatment for chronic conditions helps people to work, so if individuals lose their coverage and they lose their access to medications that control things like asthma or heart conditions and things like that it impedes their ability to work.”

The requirements could also threaten coverage for people who are working the required hours or should be exempt if they aren’t communicated clearly and the reporting is too onerous, said Laura Harker, a senior policy analyst with the left-leaning Center for Budget and Policy Priorities. 

Communicating new requirements with Medicaid beneficiaries has proven to be particularly difficult in the past, with a significant share of recipients unable to be reached by mail because they are experiencing homelessness or in temporary housing, or because they don’t have regular access to the internet. That could result in people who are eligible for an exemption, like those who have a disability or are caring for a child, losing coverage because they didn’t follow the proper reporting requirement. 

A study of the Arkansas plan found that a third of the people who were subject to the policy had not heard about it and 44% of the target population was unsure whether the requirements applied to them. 

“It just creates a lot of red tape for folks who are mostly already working, and it doesn’t actually help to increase employment,” Harker said. “It really just creates an additional burden that people have to deal with, while also not even really helping them if they are looking for employment to really increase their prospects there. So it fails really in all ways.”