Work Requirements in Medicaid: The True Costs

Many states are looking to add work requirements for their Medicaid recipients. The “fever” that has spread with various governors and state legislators has translated into 20 states in some form or another considering work requirements, either through the waiver process or through legislation. Some states are dealing with this question through their budget process, and some states are attempting to couple Medicaid expansion with work requirements.

But the genesis of this movement towards work requirements – the January letter from the Trump administration allowing states to experiment with work requirements and other eligibility rules – indicates there will be no federal dollars flowing to states to implement these requirements, and the true costs are beginning to show:

  • In Virginia, a government analysis showed adding a work requirement could cost the state $100 million dollars over the first two years if it adds a work requirement. This information is crucial as the Assembly looks to address Medicaid expansion this Wednesday, with possible consideration of a work requirement or search provision.
  • In Ohio, findings from a recent analysis by the Center for Community Solutions reveals the proposed Medicaid eligibility requirements would cost Ohio $378 million dollars in extra administrative costs for Ohio county governments over a five-year period.
  • In Kentucky, the Medicaid program could cost nearly $187 million in the first six months alone to get up and running.
  • In Minnesota, Hennepin County has estimated enforcing a work requirement would require hiring up to 300 additional caseworkers, raising the possibility bureaucratic costs would erase any savings.
  • And in Tennessee, it’s been hard for Tennessee’s Medicaid officials to estimate the expense of making sure 1.4 million TennCare members are working, caring for family, or in school. Their best guess is $38 million to start. Projecting how many will lose coverage as a result has also been tough, but they’ve landed on 3,700. And critics have done the math for lawmakers: “We’re going to pay $10,000 per person we’re disenrolling,” Michele Johnson of the Tennessee Justice Center told the Senate Health Committee. “We can’t afford that in our state.” Johnson contends the program could easily cost more than it saves. As the legislation nears final passage this week, debate has centered less on the merits of the idea and more on where the money will come from. Given the hefty price tag, the sponsors looked outside the general budget and found massive reserves in the state’s account for welfare payments. TennCare director Wendy Long said it’s up to the federal government to approve this use of the money.

The fiscal cost factor has complicated support for such measures in various states. The Government Accountability Office (GAO), through a request by Sen. Wyden and Rep. Pallone, will be looking into the question of the true costs of these requirements, and with many states still struggling to deal with fiscal challenges – especially those that haven’t expanded Medicaid – the reality of the cost of applying such requirements becomes clearer.



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