The One Big Beautiful Bill (OBBBA) made many changes to Medicaid program eligibility and financing, but arguably one of the most notable was the inclusion of nationwide work requirements. This policy will require certain Medicaid beneficiaries to prove they are either working or volunteering for 80 hours per month, enrolled at least half-time in a qualified educational program, or exempt for reasons such as medical frailty or caregiving responsibilities. Work requirements will also roll out simultaneously with a new requirement for states to increase the frequency of eligibility redeterminations from every year to every six months.
Existing research has found little evidence that employing work requirements in public assistance programs like Medicaid helps people get or maintain jobs. The evidence suggests that people are more likely to lose their benefits because of administrative hurdles rather than because they are ineligible for the program, and some people become poorer as a result. Work requirements have never been tested at scale in Medicaid and challenges in their limited implementation meant that researchers could not fully evaluate the intended policy effect. Arnold Ventures is supporting state and federal policymakers to mitigate these administrative challenges during the rollout later this year and will promote high-quality evaluations of this policy.
Bolstering State Implementation
To implement work requirements by the end of this year, states are undertaking an effective overhaul of their eligibility systems infrastructure. States will be responsible for verifying compliance with and exemptions from the requirements, communicating these changes to people who may be enrolled or eligible for the program, and educating Medicaid providers about how these changes impact their workflows. Arnold Ventures is helping states navigate OBBBA changes through strategic planning, policy development, system implementation, and peer-to-peer learning.
Informing Federal Guidance
Arnold Ventures has engaged with stakeholders across the political spectrum and levels of government to understand and raise evolving state needs. This winter, we collected perspectives from current and former state and federal officials and Medicaid policy experts to identify approaches that could support work requirement implementation and mitigate risks to those involved: government, beneficiaries, providers, and plans.
Based on this survey and past state experience implementing work requirements, below are several actions CMS could take to support the implementation:
1. Conduct readiness reviews.
CMS requires readiness reviews when states roll out new managed care programs and State Medicaid Directors have suggested that these reviews are helpful in improving states’ systems and processes. We recommend CMS conduct readiness reviews ahead of work requirement implementation; the guidelines used for states to report their level of readiness would provide greater clarity on the minimum system standards and this process can help prevent inappropriate termination notices from being sent to Medicaid enrollees in early fall.
2. Monitor and publicly report states’ disenrollment data.
During the public health emergency unwinding, there was significant state variation in how many people were disenrolled for procedural reasons, which is what happens when someone may still be eligible for Medicaid but the state is unable to verify eligibility. Often, this happens when states have incorrect contact information or when beneficiaries face issues in completing paperwork (e.g., they are unsure of their renewal status or have trouble navigating forms).
The unwinding demonstrated the value in collecting monthly disenrollment data because it allowed CMS and individual states to quickly identify and mitigate issues. Creating similar dashboards now would allow CMS and the public to understand trends and gaps, especially if reporting includes the reasons for termination and other information about disenrolled populations (e.g., former dual eligibility status).
3. Require states to use specific data files for determining who should be automatically exempt from the requirements.
OBBBA mandates that states automatically verify work requirement compliance and exemptions whenever possible, but does not enumerate which specific datasets states should consult. As a foundational resource, CMS has created Eligibility Made Easy “Emmy,” which is a new system that allows states to connect their Medicaid eligibility verification systems to additional data sources that can be used to determine who should be exempt from the requirements. However, Emmy will not include all the necessary datasets for states to effectively conduct these assessments — therefore, most stakeholders we surveyed agreed that CMS needs to specify minimum datasets for states to use. These datasets should be available at low- or no-cost, such as the National Student Clearinghouse, VA database with disability ratings, state MMIS, SNAP, and TANF. Specifying the datasets means fewer people accidentally get caught up in unnecessary paperwork when they fulfill the work requirement or if the policy was never intended to apply to them.
4. Permit phased implementation.
Finally, at Arnold Ventures, we think the best policy solutions are grounded in the evidence. Work requirements have never been implemented at scale in the Medicaid program and therefore have never been rigorously evaluated. CMS could use its good faith waiver or demonstration authority through the Center for Medicare and Medicaid Innovation to allow states to roll out the work requirements in a phased manner as long as this is paired with a rigorous evaluation. CMS can grant “good faith safe harbor” waivers for states that meaningfully try to implement the requirements but are not ready. CMS could also grant these waivers on a limited basis (e.g., by geography, such as at the county level). This approach would allow the policy to go into effect while giving states additional time to test and build their systems and it has the added benefit of enabling high-quality research, somewhat akin to the Oregon Health Experiment, to inform future policy refinement.
Looking Ahead
States are already deep into their preparations to implement work requirements by the end of this year. We think that the above principles would make these transitions smoother for CMS, states, and the people who are going to be impacted by this policy change.
For more information, reach out to Amy Abdnor / Gillian Tisdale.
