As states apply Medicaid work requirements, policymakers and stakeholders must look past top-line enrollment projections to grasp the full scope of the impact. Experience shows that work requirements introduce administrative complexity, enrollment volatility, and financial ripple effects across Medicaid programs, health insurers/managed care organizations (MCOs), providers, and employers.
For stakeholders evaluating potential implementation, the central question is not simply how many people will lose coverage, but rather: how will this policy reshape enrollment, risk pools, utilization, provider finances, and commercial insurance markets within a specific state?
Answering that question requires state-specific actuarial modeling grounded in real-world experience.
Medicaid work requirements: Lessons from early state experience
Two states, Arkansas and Georgia, that have already implemented work requirements offer important insight. The experiences in these states have highlighted the following themes:1,2
- Administrative complexity materially impacts state budgets and decreases Medicaid enrollment.
- Coverage losses were primarily driven by verification and administrative hurdles instead of actual noncompliance.
- Labor market impacts may be limited as there has been no evidence that the requirements led to sustained increases in employment.
Expected impacts of Medicaid work requirements
The impact of these work requirements will vary by state but will likely include:
- Loss of coverage due to administrative challenges rather than true ineligibility
- Enrollment shifts by eligibility category and age group
- Increased turnover frequency and coverage gap duration
- Short-term increased utilization and severity of services due to delayed care during coverage loss
- Longer-term acuity changes tied to interrupted care
Impacts across market segments
Work requirements do not affect Medicaid agencies in isolation. The effects cascade through multiple stakeholders.
State Medicaid Programs
For Medicaid agencies, expansion adults may experience greater volatility in enrollment and average member cost. Turnover will be particularly consequential, and these interruptions in care create instability in both enrollment and expenditure projections. The effects will vary significantly by state due to differing demographics, labor markets, managed care penetration, and verification processes. Accurate forecasting requires custom modeling.
MCOs
For MCOs, work requirements can introduce risk pool and rate-setting challenges. Even modest increases in turnover can materially impact medical loss ratios, risk adjustment performance, and rate adequacy. Since every Medicaid program operates within a unique state environment, actuarial modeling must use state-specific data.
Providers
Providers, particularly safety-net hospitals and community clinics, may face critical challenges: lost Medicaid revenue, increased uncompensated care, and greater revenue cycle volatility. Providers experience increased financial pressure when coverage gaps move patient care out of primary clinics and into emergency rooms. A shift toward reactive, inpatient treatment disrupts care continuity and increases the volume of uncompensated services. Bespoke modeling could increase the accuracy of cost projections for providers based on their specific data and circumstances.
Employers
Work requirements may also affect employer-sponsored insurance (ESI), especially among small employers, as they historically have had a higher percentage of employees covered by Medicaid. Coverage gaps may worsen employee health status and increase absenteeism and turnover. There may be pressure to offer ESI to maintain workforce stability. Employers may be incentivized to look for defined contribution options for health insurance. There is also the potential for upward pressure on fully insured premiums due to hospital cost shifting and potential higher claim costs if individuals transitioning from Medicaid into ESI have higher unmet health needs. Large employers may be less impacted by employees’ losing coverage. However, there are still potential increases in claim costs tied to uncompensated care costs shifting into commercial healthcare costs and potentially higher claim costs for employees shifting from Medicaid. There is also potential labor market dynamics impact as health coverage becomes a larger share of total compensation, affecting hiring decisions, job quality, and worker mobility.
Understanding these dynamics requires modeling not only Medicaid enrollment changes, but also downstream impacts on commercial insurance markets.
Why bespoke actuarial modeling matters
State Medicaid programs operate in vastly different environments with unique populations and managed care structures. Implementation choices create nuances, such as moving from monthly to quarterly reporting or utilizing automated wage verification, can significantly shift enrollment and costs.
Our actuarial team builds customized models to account for these variables and provide more precise projections. During the COVID-19 Public Health Emergency (PHE), when service delivery patterns shifted dramatically, our actuaries built a specialized model to help each client adapt individual reimbursement strategies and monitor utilization trends, which was critical to maintaining the provider networks in the early stages of the PHE.
The same disciplined, scenario-based approach applies to Medicaid work requirements. Bespoke modeling allows you to:
- Model enrollment changes by category of aid and demographic segment
- Quantify procedural disenrollment risk
- Estimate turnover-related utilization volatility
- Model potential health status deterioration due to coverage gaps
- Assess impacts on capitation rates and commercial premiums
- Support rate negotiations and policy decision-making
- Evaluate employer benefit strategies, including fully insured options, level-funded plans, and defined contribution options like Individual Coverage HRAs (ICHRAs)
Most importantly, outcomes can fluctuate based on state-specific design and implementation capacity. This variation underscores the need for customized, state-level modeling rather than a reliance on broad national assumptions.
Our work is grounded in state-specific data and operational realities. We prioritize cross-market financial dynamics to provide a precise and actionable analysis for each unique environment.
Turning policy uncertainty into actionable insight
Medicaid work requirements are more than an eligibility policy. They represent a structural shift with implications across public programs, managed care, provider finance, and employer-sponsored insurance. For stakeholders navigating this evolving landscape, robust and customized actuarial modeling is essential. By combining deep Medicaid experience with advanced customized modeling capabilities, our team helps clients move beyond uncertainty and provides clear data-driven insight into financial exposure, operational risk, and strategic opportunity. In an environment defined by policy change and market interconnectedness, precision matters.
Key takeaways
- Medicaid work requirements primarily reduce coverage through administrative barriers, not widespread noncompliance.
- Enrollment volatility and coverage gaps create downstream effects on utilization, risk pools, and costs.
- Early state experience shows limited employment gains, alongside meaningful disruption to Medicaid programs.
- Impacts extend beyond Medicaid to MCOs, providers, employers, and commercial insurance markets.
- State-specific actuarial modeling is essential to accurately forecast enrollment shifts, financial exposure, and cross‑market impacts.
About BerryDunn
Our team plays a key role in helping healthcare clients maintain financial stability by accurately assessing risks. Like our clients, who range from not-for-profit managed care organizations, risk-bearing provider systems, and group health insurance purchasers to state insurance regulators and government healthcare policy agencies, each of our solutions is unique. We embrace innovative, creative ideas to achieve the best possible results, and tailor our engagements to meet each client’s needs, providing the right services at the right time. Learn about our team and services.
References
- Arkansas study 5 Key Facts About Medicaid Work Requirements | KFF, Medicaid eligibility and enrollment in Arkansas
- Georgia study CMS’s Georgia Waiver Extension Underscores the Failure of Medicaid Work Requirements – Center For Children and Families
- State level cost/enrollment estimates Medicaid Cuts and the States: Tracking State-Specific Estimates of the Impacts of Proposed Changes
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