Preserving Economic Opportunity for Medicaid Recipients

Care for the needy and assistance to those down on their luck are hallmarks of Americans across the country. Our concern for the vulnerable among us is evident in statistics which regularly place Americans among the most willing to donate their time and money to charities which serve the less fortunate. This spirit of care extends to our political institutions in the form of different programs that provide a range of public assistance to various groups of people identified as disadvantaged such as the elderly, the disabled, and the needy. Willingness to help those less fortunate or down on their luck, however, is tempered by the risk of unintentionally creating long term dependency.

Created in 1965, Medicaid was a government program originally intended to pay for medical care for blind or disabled adults as well as the children of parents with very low incomes. In an effort to extend coverage to more of the approximately 38 million American adults without health insurance, the Patient Protection and Affordable Care Act, passed into law in 2010, included an expanded definition of Medicaid eligibility that was optional for states to adopt. While some states chose not to expand their Medicaid populations and instead focus on the truly needy, others opted to expand. As a result, millions of adults were added to Medicaid roles.

While extending government-funded health insurance coverage to more people is rooted in good intentions, there appears to be growing concern about the long-term impacts not only to federal and state budgets, but to the lifetime economic potential of Medicaid recipients. The Buckeye Institute, a “sister” think tank in our network, has recently released a study showing that Medicaid recipients, through economic decisions related to their work choices, face unintended consequences and may be sacrificing long term earnings ultimately preventing them from improving their lives. A solution may be the addition of work requirements for otherwise healthy Medicaid recipients.

Entitled “Healthy and Working, Benefits of Work Requirements for Medicaid Recipients,” the study seeks to measure the impact of work requirements for able-bodied, childless, adult Medicaid recipients. Work and “community engagement” requirements, such as education and job training, are intended to keep Medicaid recipients participating in the labor force, helping them gain valuable work experience, generate higher earnings, and more income over the course of their lives.

Medicaid benefits are typically “means tested,” that is limited to individuals making less than a specified income level. Some Medicaid recipients avoid working more hours or seeking better employment options which would increase their earnings so that they remain eligible for Medicaid coverage. In order to receive a short-term benefit, Medicaid healthcare coverage, people are harming their long-term earning potential.

The study’s conclusion? Even assuming a person remains on Medicaid for their entire life, work requirements increase lifetime earing by $212,694 for women and $323,539 for men. For people who completely transition off Medicaid? They may earn close to $1 million more over the course of their working years.

Medicaid costs make up the bulk of Alaska’s Health and Social Services budget. Tens of thousands of otherwise healthy and able-bodied Alaskans were added to our state’s Medicaid rolls under the Walker administration. Like so many other paths paved with good intentions, long-term dependence on Medicaid may result in leaving its intended beneficiaries in a far worse place than they otherwise would have been.