Medicaid work requirements in Arkansas jeopardize millions in funding

A handful of states have received approved waivers to implement Medicaid work requirements, mandating that a certain population of beneficiaries report 80 hours per month of work or work-related activities. Among these states, Arkansas was the first to implement its work requirement program, with thousands losing Medicaid coverage within the first few months.

Now, hundreds of millions of dollars in federal funding may be in jeopardy as a result of the program, Arkansas Works, according to a recent analysis from the Commonwealth Fund.

Arkansas was one of the 36 states to expand Medicaid under the Affordable Care Act, increasing the number of insured residents by 223,000.

In the third month of Arkansas’ work requirements program, 4,500 people lost their Medicaid benefits. Over a 12-month period, between 30,700 and 48,300 adult beneficiaries, or about 19 to 30 percent of the target population, could lose insurance coverage as a result of not meeting the work requirements, according to the Commonwealth Fund’s analysis. That works out to upwards of $340 million in federal funding.

Low-income adults may face more work fluctuations that could put them at risk of losing Medicaid benefits, because of issues like seasonal work and inconsistent work schedules, according to the Commonwealth Fund. Exemptions for full-time students, medical frailty and other reasons also end at some point, which leaves more people vulnerable to losing their insurance coverage.

In addition to those who may lose benefits from the work requirement program, about 42,400 people are estimated to lose Medicaid for other reasons. That nearly doubles the losses over 12 months, and the benefit to the state likely isn’t much.

“Because the state share of the cost of the Medicaid expansion is so low, and the Arkansas share of federal taxes to finance it is so small, the primary fiscal consequence of shrinking the number of people covered through the Medicaid expansion in Arkansas is a substantial net loss of federal dollars to the state,” Sherry Glied, PhD, dean of the Robert F. Wagner Graduate School of Public Service at New York University, wrote about the impact to Arkansas’ economy.

For each resident, the work requirement saves between $8 and $13 per year, while the state foregoes about 5 percent of its total state tax revenue collection, between $71 and $112 per resident.