When President Bill Clinton signed welfare reform into law, many critics warned of impending calamity for welfare recipients. Individuals on welfare would be unable to comply with work requirements and would face dire poverty. These critics underestimated the ability of welfare recipients to find work and stay employed.
Today, the debate is over the amount of gains welfare recipients who returned to work made, not whether or not they fell into dire poverty. Many recipients, particularly women, made large strides in the work force and increased their family income by work. It appears this debate is going to be repeated, this time over Medicaid work requirements.
President Donald Trump's administration made clear that work requirements are now allowed in Medicaid waivers, and the Centers for Medicare and Medicaid Services just issued guidelines for the approval of work requirements. The administration has now strongly encouraged states to include these requirements in Medicaid waivers.
Much like welfare reform, this would be a welcome change that would move able-bodied Medicaid recipients back into the workforce. The traditional Medicaid population, such as the elderly, disabled, the blind, pregnant women, foster children, and many others would not be affected by work requirement waivers.
When the Congressional Budget Office (CBO) analyzed the Affordable Care Act (ACA), it found that the ACA would reduce work, in large part because of Medicaid expansion. Single, childless, able-bodied adults were made eligible for Medicaid under the ACA, and CBO estimated that many of these individuals would work less since they no longer needed full-time jobs to maintain health insurance. Indeed, labor force participation in the U.S. has fallen and public policies like Medicaid expansion, which can deter work, have contributed to this.
Critics of work requirements in Medicaid will say that healthy Medicaid recipients will struggle to find work, and the requirements are unfair and burdensome. However, evidence shows that healthy Medicaid recipients do find work if they need to maintain health insurance. When Tennessee ended a Medicaid expansion program for healthy adults, academic research followed the Medicaid recipients. It found that many of them found work or increased the hours they worked in order to obtain health insurance.
Like the debate over welfare reform, Medicaid recipients have the ability to work and earn wages and they will have the added benefit of gaining experience in the workplace, learning new skills, and earning additional income. Without the work requirement, an individual's skills will degrade the longer they are out of work, and the harder it becomes to find a job.
States that expanded Medicaid are eager to be able to use waiver requirements to help their Medicaid programs. Ten states currently have a Medicaid waiver that incorporates some form of work requirements pending with the federal government.
Other states like Ohio are working to submit a new waiver with some type of work requirements. These work requirements do not impose a 40-hour work week and many requirements can be fulfilled through charitable work, job training, or other educational programs.
Work requirements in welfare reform were a successful recognition that work is valuable for individuals, families and societies. Encouraging people not to work but to become dependent on government reduces economic mobility and can reduce a person's lifetime income. Encouraging healthy people to work more, which will likely result in higher future earnings, should not be controversial but rather common sense.
In short – work requirements work.
Rea S. Hederman Jr. is executive director of the Economic Research Center at The Buckeye Institute and vice president of policy.