The Budget Reconciliation Mandate and Medicaid’s Role
In the long road to a Budget Reconciliation Act, the House Concurrent Resolution instructs the Committee on Energy and Commerce to “submit changes in laws within its jurisdiction to reduce the deficit by not less than $880,000,000,000 for the period of fiscal years 2025 through 2034.”[1] It is expected changes to Medicaid will produce most, if not all, of these savings. Healthcare is delivered locally. Every House member will want to know how changes impact his/her constituents and district.
Challenges for the Committee
The fundamental challenge to the Committee is to find ways that: 1) generate significant levels of savings for both the federal government and the states; 2) are equitable among the states; and 3) preserve Medicaid’s ability to fulfill its expansive mission.
The Evolution of Medicaid Enrollment
The original purpose of Medicaid when it was created in 1965 was to provide medical assistance to a relatively small number of the elderly, people with disabilities, and children and their parent/caretaker relatives with household income significantly below the poverty level. By definition, it was (and is) the expectation these Medicaid enrollees would NOT be substantially engaged in the workforce. Today tells a different story. As the table below illustrates, the Medicaid population grew by 243% between 1990 and 2020 compared to just 33% growth in the U.S. total population.[2]
U.S. and Medicaid Populations in millions
| 1990 | 2000 | 2010 | 2020 | Change 1990 - 2020 | |
|---|---|---|---|---|---|
| US Population | 248.7 | 281.4 | 308.7 | 331.4 | 33.3% |
| Medicaid Enrollees | 22.8 | 34.1 | 54.0 | 78.2 | 243.0% |
| Medicaid as Percent of Total | 9.2% | 12.1% | 17.5% | 23.6% |
Today, the federal government and the states spend more money to administer Medicaid than they pay out in benefits for the Temporary Assistance for Needy Families (TANF) program.
Work Requirements for Medicaid: A Potential Solution?
One measure under serious consideration is a work requirement for able-bodied working age adults. There is widespread support for work requirements in exchange for public benefits as an important component in the social compact between taxpayers and beneficiaries. For example, in an April 2023 election in Wisconsin, nearly 80% of voters supported a nonbinding advisory question regarding work requirements for welfare benefits.[3]
State Flexibility in Implementing Work Requirements
If a Medicaid work requirement becomes law, it will be up to the states to implement it. Every governor should want to have a say in how such a requirement will work in his/her state. Policymakers at the federal and state levels understand that the major means-tested public assistance programs, including Medicaid, contain a design flaw called the “benefit cliff.” The cliff discourages from earning “too much” lest they lose their benefits.
The “Jobs and Opportunities for Medicaid Act”
Representative Crenshaw (R-TX02) and Senators Kennedy (R-LA) and Schmitt (R-MO) have introduced the “Jobs and Opportunities for Medicaid Act” (H.R.1059).[4] The bill is intended to exempt the original Medicaid populations from a work requirement. It would require able-bodied adults without dependents to work or volunteer for at least 20 hours per week. However, full-time full-year work equals 2,080 hours. Thus, the legislation requires only half of the amount of time at a wage of $11 per hour necessary for a single person to move off Medicaid. While permitting volunteerism to “count” as “compliance,” month after month, it may do nothing to increase the earnings necessary to cross the bridge to personal and family sustainability. If the result is only to have people cycle off and on Medicaid, the anticipated savings will be substantially lower than expected.
Medicaid Work Requirements as a Bridge to Self-Sufficiency
The link between poverty and poor health and even premature death is indisputable and has been established for decades. Medicaid work requirements should become a strategy for states to help individuals cross over the benefit cliff permanently.
President’s Commission on Health and Poverty Omission
On February 13, 2025, President Trump signed an Executive Order creating the “President’s Make America Healthy Again Commission.”[5] The E.O. states:
Ninety percent of the Nation’s $4.5 trillion in annual healthcare expenditures is for people with chronic and mental health conditions. In short, Americans of all ages are becoming sicker, beset by illnesses our medical system is not addressing effectively. These trends harm us, our economy, and our security.
To fully address the growing health crisis in America, we must re-direct our national focus, in the public and private sectors, toward understanding and drastically lowering chronic disease rates and ending childhood chronic disease. This includes fresh thinking on nutrition, physical activity, healthy lifestyles, over-reliance on medication and treatments, the effects of technological habits, environmental impacts, and food and drug quality and safety.
The Overlooked Factor of Poverty
The E.O. is an important starting point. However, it omits any reference to poverty which is a major indicator of poor health. One of the first places to look for “fresh thinking on nutrition” is the Supplemental Nutrition Assistance Program (SNAP), which permits the purchase of candy and beverages of no nutritional value. Childhood poverty has been estimated to cost $1 trillion annually.[6] What federal policies and structures are barriers to escaping poverty? Commission members do not include the CMS, nor does it include governors. Both are vital to long-term success.
Conclusion: The Role of Expertise and Program Management
Effective program design and management by highly skilled and trained professionals, inclusive of a control environment to mitigate fraud, waste and abuse with oversight by certified healthcare audit professionals, is critical to the implementation of programs that will result in the transformation of healthcare focus, design and sustainability in the United States. HORNE, with over 60 years of healthcare industry experience, stands ready to help governments and their communities achieve sustainable success in both fiscal and programmatic initiatives.
Citations
- [1] BUDGET RESOLUTION FY25 p.35
- [2] Data from U.S. Census Bureau and Centers for Medicare & Medicaid Services National Health Expenditures Historical, Table 22; percentages calculated.
- [3] Estimating the Economic Cost of Childhood Poverty in the United States
- [4] Wisconsin Ballot Measures – April 4, 2023
- [5] 119th Congress 1st Session
- [6] Establishing the President’s make America Healthy Again Commission
