One of the most contentious parts of President Trump’s recent tax bill is its requirement that “able-bodied” Medicaid recipients ages 19 to 64 (with some exceptions) go to work. Proponents say the policy will slash federal Medicaid spending and promote self-sufficiency, both laudatory goals.
There is one big issue though. These rules are unlikely to work, based on history and my independent analysis of census data from the Survey of Income and Program Participation, or SIPP. If the administration is serious about achieving these goals, it would do better to incentivize the private sector to provide more jobs with insurance.
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There are four chief problems:
The target audience for Medicaid work requirements is small
As others have noted, most non-disabled Medicaid enrollees already work, perform other qualifying activities, or are exempt from work requirements. The proportion of adult Medicaid recipients who actually work more than 80 hours per month for wages is 44%, according to the American Enterprise Institute, and most of the other 56% are engaged in alternatives like caring for children or going to school, or have a health-related work limitation. Bottom-line estimates of those not in compliance range from 8% to 15% of the adult Medicaid population.
We know this from the SIPP database, which tracks recipients’ income and participation in federal programs like Medicaid. Here’s a snapshot: In December 2021, 52% of working-age Medicaid enrollees who were not receiving SSI/SSDI (disability payments) worked 80 or more hours. The most common reasons for not working were caregiving for a child or others (20%), disability or chronic health condition (20%), or in school (17%). The portion not interested in working — just 5% — presumably represents the group with the most capacity to respond to work incentives, although many have children or go to school as well.
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The limited history of work requirement programs is full of failure
The one long-term experiment was in Arkansas. After its enactment, 18,000 adults left Medicaid in just six months. Research found that many people were unaware of the new rules and confused about reporting requirements. There was no evidence that labor force participation increased. The complexity and frequency of required reporting make it hard to satisfy the enrollment rules for those now ill or caring for others. After Arkansas canceled its rules, most coverage losses soon reversed.
Work requirements are costly for states to run, and so far get few takers
Georgia is the only state with an active work requirement as a condition for its Medicaid expansion group. The program launched in July 2023. By July 2025, fewer than 7,500 people had enrolled in the program, a measly 3% of those with qualifying incomes. Applicants also face a steep paperwork burden, the program’s first-year results show, with only 5% able to navigate the full application process. Further, the program was costly — more than $13,000 per enrollee — with much of those funds going to administrative expenses like technology upgrades, not health care. That’s not promising.
If work requirements induced the few Medicaid enrollees not working to take jobs at firms without insurance, Medicaid would still have to pay
The only way for work requirements to shrink the Medicaid rolls by inducing people to work is to get them to take jobs that come with insurance benefits. Getting them to drop out of Medicaid and become uninsured because of inability or unwillingness to cope with red tape is not a noble policy goal.
There’s a better way forward
A more effective approach is to encourage employers to offer coverage and workers to search for jobs with health benefits. Right now, the incentives are the opposite of ideal.
Firms with fewer than 50 employees that are not subject to the ACA employer mandate can hire workers who then remain on Medicaid — which means that Medicaid is still be paying for these employees. The government subsidizes small firms that do not offer coverage, while offering little help (other than a tax break) to small and large firms that bear the burden of employee insurance.
Instead, the government should encourage employers to offer jobs with insurance because that will be a cost-effective way to reduce future Medicaid costs.
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To do this, the government should direct subsidies to larger firms offering benefits to all employees like Costco and Starbucks. Employer-sponsored insurance often requires workers to share the cost of coverage (in contrast to Medicaid), so using federal funds to offset those expenses would help.
A more ambitious approach would be to build on existing programs that involve training and guiding workers to become qualified for such jobs. The current low unemployment rate suggests that there might be opportunities to train and hire more people.
Work rules have further split the country, with some arguing that they are merely tools to drive people off Medicaid. Shifting the focus away from work requirements — and toward training workers for jobs that already offer coverage and offering employer incentives to provide jobs with insurance — might be something many would support. While not politically ideal, it would be better than work requirements where poor administration of eligibility will encourage qualified people to become uninsured, adding to strain on an already struggling health system.
Mark V. Pauly is a former executive director of the Leonard Davis Institute of Health Economics and Bendheim professor emeritus at Wharton at the University of Pennsylvania.