Medicaid Work Requirements Threaten to Place Additional Financial Strain on California Families with Infants and Toddlers

Traditionally, Medicaid eligibility has been primarily based on income. However, Congress is exploring introducing work requirements for Medicaid. Work requirements would not only threaten the healthcare coverage of millions of Californians but also significantly impact families' ability to access essential healthcare services, further exacerbating existing material and economic hardships experienced by Medicaid families with infants and toddlers. Work requirements would add new criteria for eligibility for those enrolled in the program, tying a beneficiary's health coverage to their ability to work as a condition to keep their health care coverage.

As Congress continues to debate how to finance trillions of dollars in proposed tax cuts, Medicaid reform remains a sticking point for those looking to shrink entitlement spending. Recently, House Speaker Mike Johnson, R-LA., said they have ruled out any changes to the Federal Medical Assistance Percentage rate for the Medicaid expansion population, which is currently 90 percent. He also said per capita caps on Medicaid beneficiaries in expansion states is also off the table.

One policy change that remains on the table are Medicaid work requirements. The idea of instituting a federal work requirement for Medicaid expansion enrollees has garnered the attention of members of Congress. On Monday, Speaker Johnson was quoted saying, “[Medicaid work requirements] That will be part of the bill, it always has been.”

Several states have implemented Medicaid work requirements, with Georgia being the only state with active work requirements. Arkansas was the first state to implement work requirements for its Medicaid program in 2018. These requirements ended in March 2019 due to a court order. During the 10-month timeframe more than 18,000 beneficiaries lost coverage, during which many experienced adverse consequences, including delayed care and increases in medical debt. Medicaid beneficiaries in New Hampshire and Michigan experienced similar losses in coverage and adverse outcomes during the states' brief implementation of work requirements.

While the details of Congress’ budget proposal are still forthcoming, California would be amongst the states hardest hit by work requirements for all working-age non-disabled adult. Of the 15 million Californians on Medi-Cal, over 8 million fall into the category of working-age non-disabled adults who would be targeted by Medicaid work requirements. More than half of those adults are the primary parent or caregiver for a child under the age of 18. If California were forced to implement a Medicaid work requirement, it is estimated that 56 percent of the state's Medi-Cal population would be at risk of losing their health coverage.

This is alarming, as it comes during a time when over one-third of California families with infants and toddlers reported that they were struggling to meet their basic needs, which includes spending on health care. The same survey found that more than two-thirds of these families also reported experiencing moderate-to-extreme stress when thinking about how they would be able to afford their basic needs. The challenges of being able to afford basic needs and the stresses that come with it can trigger an adverse chain reaction of hardship that ultimately leads to an increase in emotional distress in their infants and toddlers. This adverse chain reaction of hardship can have far-reaching consequences for their health and development, affecting children's emotional, behavioral and physical well-being.

In the past, work requirements have been legally contentious. To implement work requirements, States must submit an 1115 waiver to the Centers for Medicare and Medicaid Services. Even if the waiver is approved by CMS, the proposal can be delayed or overturned through the legal process. If Congress were to pass legislation requiring states to implement work requirements as part of states' Medicaid programs, it could circumvent many of the previous legal challenges that have prevented most work requirement policies from being fully realized.

As Medicaid faces threats at the federal level, it is paramount for California advocates to counter reforms that could have long-lasting, negative impacts for Medi-Cal beneficiaries, especially those with infants and toddlers.