The Trump administration announced Thursday it will allow states to impose work requirements on abled-bodied adults to qualify for Medicaid. This marks the first time the federal government has allowed any kind of work requirement for Medicaid eligibility—and it’s about time.
On the surface, work requirements for Medicaid might seem cruel or punitive. After all, Medicaid is supposed to provide health coverage to the poor and disabled, the most vulnerable among us. As a policy proposal, work requirements may seem almost tailor-made to make Republicans look cold and heartless.
But the reality is that Medicaid, like most federal and state welfare programs, has gotten so out of control and strayed so far from its original purpose that imposing work requirements on able-bodied adults will actually help enrollees far more than Medicaid coverage will, mostly by giving them a strong incentive to secure full employment.
Medicaid Wasn’t Supposed to Be This Massive
But before we get into the weeds of welfare dependency, let’s recall what Medicaid is. Created in 1965 along with Medicare, Medicaid was originally conceived as a program to provide health care to strictly defined groups: poor children deprived of parental support, their caretaker relatives, the elderly, the blind, and those with disabilities. In 1986, states were given the option to include poor, pregnant women and their infant children.
For a federal entitlement, it was remarkably limited and targeted to discreet populations. The idea was that Medicaid would only be for people who otherwise couldn’t get private health insurance or reasonably afford medical care. In other words, Medicaid didn’t originally cover almost any able-bodied adults. That’s not who it was for.
Obamacare changed all that. Medicaid expansion under the Affordable Care Act was more than a simple expansion of the program, it was a transformation. In his 2012 majority opinion in NFIB v. Sebelius, U.S. Supreme Court Justice John Roberts affirmed this view, writing, “Under the Affordable Care Act, Medicaid is transformed into a program to meet the health care needs of the entire nonelderly population with income below 133 percent of the poverty level. It is no longer a program to care for the neediest among us, but rather an element of a comprehensive national plan to provide universal health insurance coverage.”
Roberts goes on to explain that when states agreed to participate in Medicaid, they could never have anticipated that Congress would fundamentally transform the program into a broad-based entitlement covering a completely new (and sizeable) population. Medicaid expansion meant, among other things, that the program would now offer coverage to anyone making less than about $16,000 a year, including able-bodied, childless adults of working age.
It’s these able-bodied adults, not the traditional Medicaid enrollees, that the Trump administration’s policy on work requirements targets. According to The New York Times, “The Trump administration said that state Medicaid officials could not impose work requirements on pregnant women, elderly beneficiaries, children or people who were unable to work because of a disability.” In other words, all the people covered by Medicaid before Obamacare’s radical expansion of the program are exempt from work requirements.
We should therefore understand the announcement about work requirements as a corrective to Obamacare’s massive expansion of Medicaid, which accounts for the vast majority of coverage gains under the Affordable Care Act. By putting millions of able-bodied adults on the Medicaid rolls, Obamacare created perverse incentive for those enrollees to limit their income so they could keep their Medicaid coverage.
Work Requirements Will Free People From Dependency
Such incentives are powerful—and in the long run, harmful to welfare beneficiaries. Work requirements are a proven way to unwind perverse incentives and improve people’s lives.
By contrast, progressives consider work requirements insulting and demeaning. They say conservative rationales for them are at best disingenuous and at worst malicious. Recently, the Washington Post’s Elizabeth Bruenig wrote: “For conservatives and thus-inclined Democrats, work requirements are about making sure that people who receive federal aid aren’t lazy loafers living off the dole — ‘welfare queens’ in Reaganite parlance.”
But nothing could be further from the truth—or the actual record of work requirements. The 1996 welfare-reform bill (the Personal Responsibility and Work Opportunity Reconciliation Act) saw a significant drop in the number people receiving cash assistance through Temporary Assistance for Needy Families, or TANF. The key element was allowing states to create work requirements, which most of them did.
But the Obama administration encouraged states to waive work TANF requirements, with the result that by 2015, 42 states had partially or completely waived them, and food stamp enrollment skyrocketed to nearly 46 million (from 17 million in 2000).
Some states pushed back. In 2013, Kansas reinstated work requirements for able-bodied, childless adults on food stamps, and the results were unambiguous. By 2016, the number of able-bodied adults had dropped by 75 percent. Within the first year of reinstating work requirements, more than half of those leaving food stamps found employment. Their incomes rose by an average of 127 percent per year.
Such results shouldn’t shock. Long-term welfare tends to trap people in poverty, and policies like work requirements free welfare recipients from the trap. The Trump administration, to its credit, seems to understand this. Insofar as expanded Medicaid has become a lot like food stamps—a broad-based entitlement for childless, abled-bodied adults—including work requirements will help enrollees get what they really need: full-time employment.