Medicaid work requirements could remove at least 2.1M people if applied nationally, with limited savings

As the Trump administration barrels forward on Medicaid work requirements, new studies show the policy could remove millions from the program if implemented across the country.

In two recent studies highlighted by JAMA Internal Medicine, researchers found that, if implemented nationally, work requirements as written would not save a significant amount of money. But if those requirements throw more people off Medicaid than intended, which researchers find likely, savings could be higher.

Most of the Medicaid population is either already working or would be exempt from work requirements due to disability. Because those groups would retain coverage, one study found that only 2.8% of current enrollees should be at risk for disenrollment—a group that accounted for just 1%, or $3.8 million, of Medicaid spending last year.

Applied nationally, that 2.8% represents 2.1 million Medicaid beneficiaries.

RELATED: HHS 'undeterred' by court decision striking down Kentucky's Medicaid work requirements 

And even that amount of savings could diminish if analysts accounted for the cost of implementing work requirements. Like drug testing requirements for food stamp recipients, the cost of administering such a policy could eat into—or erase—the savings generated by the policy.

"It's not insignificant and it's definitely possible that the cost of the implementation might exceed the savings, but that would only be if there's no spillover effect and there probably will be," lead author Anna Goldman, M.D., M.P.H., told FierceHealthcare.

That "spillover effect" is the rub. If proponents of work requirements seem more bullish on the idea than its initial outlook suggests, it could be because they are counting on spillover to take more people off Medicaid than are truly ineligible.

According to the letter of the law, people with disabilities are exempt from work requirements and those already working should be able to retain their Medicaid coverage. But at least some enrollees will be unable or fail to comply with documentation requirements in the new policy and will therefore lose Medicaid coverage for which they should have been eligible. 

RELATED: Democratic lawmakers say Medicaid work requirements could force families off coverage

The precise amount of spillover is difficult to estimate, so while researchers noted its existence, they kept it out of their estimates. As a result, states could see increased savings from work requirements if the spillover effects prove large. However, in that case, "these savings would likely come at a substantial cost in terms of human health," Goldman noted in the study.

"I think that in reality, it will save more money than we estimated, but we sort of wanted to estimate what the requirements would be if they followed the letter of the law," Goldman told FierceHealthcare. "Either they're not going to save any money or they're going to throw a lot of people out that shouldn't be thrown out. Those are the two possibilities here."

Of those at risk of disenrollment, the average annual income is $3820, according to Goldman's study and 42% are Black or Hispanic.