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Behavioral Science Shows Why Medicaid Work Requirements Can’t Be Fixed

Large numbers of people subject to a work requirement under Arkansas’ Medicaid program don’t know about or understand the requirement and complying with it is “hassle-filled,” says a new paper on work requirements based on behavioral science.

Work requirements can’t be “fixed,” as we’ve written and the new paper from nonprofit consulting firm ideas42 confirms. People who are already working or who should qualify for an exemption will lose coverage — along with others who aren’t working and don’t qualify for exemptions but who face barriers to work and have serious health needs.

Behavioral science teaches that everyone has limited attention and cognitive bandwidth, but people living in poverty face chronic scarcity, which forces them simultaneously to manage multiple challenging problems and requires enormous mental effort.

Taking behavioral science research into account, ideas42 researchers found that reducing poverty requires, among other factors, cutting costs by reducing hassles and complexity and building a cushion of time, money, attention, and other resources. But work requirements do the opposite by adding hassles and complexity, thereby increasing the cognitive costs of participating in Medicaid and other safety net programs. They also force people to make impossible choices between meeting these new requirements to stay covered or taking care of their other needs.

In Arkansas, the only state to have implemented a Medicaid work requirement to date, almost 1 in 4 people subject to the requirement lost coverage in the first seven months. In a case study on Arkansas Works, the state’s Medicaid program, the ideas42 authors explain that people get no help either with finding work or claiming exemptions. For those who are working, reporting compliance is “full of hassles that are likely to increase drop-off.” The authors conclude that “almost every element of Arkansas Works is designed and implemented in a way that compounds the negative effects of chronic scarcity.”

Recent court decisions on Kentucky and Arkansas waivers confirmed that taking coverage away from people who don’t meet a work requirement conflicts with Medicaid’s central objective of providing affordable coverage to people who wouldn’t otherwise have it and, thus, isn’t an allowable use of federal authority to give states Medicaid waivers.

Behavioral science shows that the policy of letting states impose Medicaid work requirements fails on its own terms. Work requirements can’t be fixed to avoid taking coverage away from people who can’t comply, including many who are working or should be exempt.