Medicaid Work Requirements Are a Short-Term Fix to a Long-Term Problem
A more effective reform is to let the market curb waste and reward innovation.
Funding for Social Security, Medicaid, and Medicare accounted for 41 percent of federal spending in FY 2024. The One Big Beautiful Bill Act, which is expected to add $3.9 trillion to the federal deficit over the next 10 years, aims to rein in some entitlement spending by implementing work requirements for Medicaid recipients. However, these provisions could backfire by increasing administrative burdens and making the program less efficient.
Currently, the bill would require beneficiaries aged 19–64 who apply for Medicaid or who are enrolled through the Affordable Care Act expansion group to document 80 hours of work or qualifying activities per month. Previously, Medicaid eligibility was not contingent on meeting a work or reporting requirement. The Congressional Budget Office estimates that the work requirement provisions included in the bill could reduce federal spending by $344 billion (total Medicaid spending is estimated to be $655.9 billion in FY 2025) but result in 11.8 million more people being uninsured by 2034.
Most Medicaid recipients (92 percent) under the age of 65 already work full- or part-time jobs, according to KFF. The bill also includes exemptions from the requirements for certain adults, including parents of dependent children and those who are medically frail. These requirements would take effect nationally no later than December 31, 2026.
States have attempted to implement work requirements for their Medicaid programs, but have faced challenges to successful implementation. In 2018, when Arkansas attempted to implement similar Medicaid work requirements, confusion with paperwork resulted in 18,000 people losing health care, and there was no improvement in employment rates. Georgia's work requirement program, which began in 2023, spent $55 million verifying eligibility. It enrolled only 2.3 percent of the estimated 240,000 Georgians who were eligible for the program.
Marina Nitze, a crisis engineer whose firm, Layer Aleph, has worked on state unemployment systems, tells Reason, "Work requirements may sound like a good fraud prevention step, but implementing them is a nightmare that dramatically increases administrative burden and makes it much costlier to implement the program."
The bill allocates $100 million for all states and $50 million to the Department of Health and Human Services to overhaul their administrative systems and enforce these requirements. For a state like California, which spent over $236 million on private contracts to revamp its Employment Development Department during the COVID-19 pandemic, the amount could be inadequate and raises concerns about the financial strain the provision will place on states.
"The implementation is not properly funded. They've set a timeline to implement this that is entirely unrealistic, and state Medicaid directors are explicitly stating that," Pamela Herd, a professor of social policy at the University of Michigan, tells Reason.
Anna Bonelli, director of health policy for the Committee for a Responsible Federal Budget, echoes this sentiment. "This is a brand new endeavor, and it requires information that states don't typically track; there are all the startup costs that are involved in undertaking that kind of thing."
While the work requirements and eligibility rules aim to reduce Medicaid costs, they fail to address the program's larger issue: government intervention. When the government sets eligibility rules, price caps, or bureaucratic hurdles in health care, care becomes less accessible and less efficient. It places the burden of entitlement spending on states, resulting in an expanded bureaucracy and higher costs.
Jacob James Rich, policy analyst at Reason Foundation (the nonprofit that publishes this website), notes that market incentives reward innovation, curb waste, and align supply with demand. "Work requirements may be justifiable, but they will harm people. A better solution for Medicaid is to maximize market incentives, eliminate regulations that hinder health care, and provide access without market interference," he says.
Republican lawmakers claim their goal is to eradicate waste, fraud, and abuse in Medicaid. However, if enacted, the provisions in this bill could increase the administrative state and make the program less efficient. The answer to making Medicaid efficient lies in empowering the free market, not the government.
