The X Factor: How the Labor Force Continues to Be Decimated by Skyrocketing Medicaid Enrollment
Key Findings
- The focus of the Medicaid program has shifted from the truly needy to able-bodied adults.
- Labor force participation rates have fallen while Medicaid enrollment has exploded.
- Able-bodied adults are the driving force behind this Medicaid enrollment explosion.
- Most able-bodied adults on Medicaid are not working at all.
Overview
Prior to the COVID-19 pandemic, all economic indicators pointed toward a booming economy. Unemployment levels were at 50-year lows, there were millions of open jobs across all sectors of the workforce, and work was paying better than ever.1 Unfortunately, the pandemic derailed much of the progress made by the Trump administration, and the economy has yet to fully recover.
Employers remain desperate for workers, but there are not enough workers to fill the demand. Today, there are more than three million more open jobs than people actively searching for work.2 Indeed, there are more than eight million open jobs nationwide—much higher than pre-pandemic levels and inching closer to the record high recorded in 2022.3 Even worse, nearly 45 million Americans quit their jobs in 2023—only slightly lower than the record-breaking year prior.4
Despite President Biden claiming that the United States economy is the strongest in the world, nearly half of all Americans believe their personal financial situation is getting worse.5 And even though inflation has slowly begun to dip, it remains much higher than before President Biden took office.6
The American comeback has stalled, and the reason is simple: Millions of Americans have transitioned from work to welfare. The most glaring example of this shift can be found within the Medicaid program where enrollment has skyrocketed and most able-bodied adults aren’t working at all.7
The focus of the Medicaid program has shifted to able-bodied adults
The Medicaid program was created nearly 60 years ago to serve truly needy populations, such as low-income children, pregnant women, people with disabilities, and seniors.8 However, after the passage of the Affordable Care Act—more commonly known as ObamaCare—the focus of the Medicaid program has shifted toward able-bodied adults.9
ObamaCare ushered in an entirely new class of individuals—able-bodied, childless adults—who would be considered eligible for benefits via Medicaid expansion.10 In traditional Medicaid, applicants are typically required to demonstrate a need for the benefits, as simply meeting income thresholds does not necessitate eligibility.11 But in states that have expanded Medicaid, able-bodied adults can qualify for benefits based on income alone with assets ignored completely —a stark contrast between traditional Medicaid and expansion.12
The fallout from Medicaid expansion has been twofold. As millions of able-bodied adults have flooded the Medicaid rolls nationwide, the truly needy—those the program was designed for—have been shoved to the back of the line.13 Meanwhile, as Medicaid enrollment has skyrocketed, America’s labor force participation rates have plummeted.14
Medicaid enrollment has skyrocketed while labor force participation rates have shrunk—Resulting in the “X Factor”
In 2000, the labor force participation rate was at an all-time high of just above 67 percent.15 But in the decades that followed, labor force participation rates began declining across the board.16
By 2023, labor force participation rates fell to just shy of 63 percent—a decline of seven percent.17 The 2023 labor force participation rates closely resemble those of the 1970s.18 Meanwhile, Medicaid enrollment has soared to new heights—adding nearly 63 million individuals to the rolls in just 23 years.19-21
Since 2000, the Medicaid program has been flooded with able-bodied adults—with more than 33 million enrolled in a little more than two decades.22-23 The primary driver of this growth has been Medicaid expansion, as able-bodied adult enrollment has more than doubled since 2013—the year before expansion went live—resulting in massive enrollment and cost overruns for states that took the bait.24-26
Instead of powering the growth of the labor force, able-bodied adults are instead being added to the Medicaid rolls by the millions—consuming resources that could go to the truly needy and delaying a desperately needed economic comeback. Despite there being millions of open jobs and employers desperate for workers, most able-bodied adults on Medicaid are not working at all.
The majority of able-bodied adults on Medicaid are not working
In other welfare programs—such as food stamps and cash welfare—able-bodied adults receiving benefits must adhere to a work requirement.27-28 Typically, able-bodied adults must work, train, or volunteer on a part-time basis to remain eligible for benefits.29 This encourages an eventual transition from welfare to work, as welfare programs were designed to lend a helping hand, not provide a long-term handout.
However, the Medicaid program has no federally mandated work requirement. Some states received approval from the Trump administration to implement work requirements in their Medicaid programs, but the Biden administration has since revoked all existing waivers.30 And under the current administration, any new waiver requests are likely to be denied.31
Unsurprisingly, most able-bodied adults on Medicaid are not working at all.32 New data from state Medicaid agencies shows that 60 percent of able-bodied adults on Medicaid reported no earned income.33 Nationwide, an estimated 24.6 million able-bodied adults on Medicaid are not working at all—which is more than the entire population of Florida.34-35
Meanwhile, there are more than 692,000 Americans who are languishing on Medicaid waiting lists while non-working, able-bodied adults consume limited resources.36
The growth in enrollment has shown that without a real work requirement, these able-bodied adults are unlikely to voluntarily enter the workforce and will continue to sit on the sidelines. And with the Biden administration offering no flexibility on the issue, states around the country are struggling to keep their economies afloat with millions of workers absent.
States are struggling to manage massive Medicaid growth with a faltering workforce
Since 2000, every state has seen its labor force participation rate shrink and their Medicaid enrollment surge upward.37 For a full economic recovery to occur, states must bolster their workforce and preserve their welfare programs for the truly needy.
Medicaid mishaps in Missouri
Lawmakers in Missouri have struggled to maintain balance in their Medicaid program, as enrollment and spending have both surged in recent decades.38 Since 2000, enrollment in the state has nearly doubled, adding more than 635,000 individuals to the Medicaid rolls.39-40 In that time, Medicaid spending has more than quadrupled, accounting for 41 percent of total state expenditures in 2023.41-42
Meanwhile, the state’s labor force has remained in free fall as workforce participation has declined by 10 percent.43 Despite false promises from advocates, expansion has not revitalized the Missouri workforce.44 Instead, hundreds of thousands of able-bodied adults have been added to welfare.
Medicaid expansion is sinking Idaho
In just over two decades, Medicaid enrollment in Idaho has grown by a whopping 217 percent—with more than one in five Idahoans currently enrolled in the program.45-47 Over that time, the state’s Medicaid spending has increased by 477 percent—seven times higher than it was in 2000.48-49
But while the state’s Medicaid program has experienced colossal growth, labor force participation has not kept pace. Labor force participation rates have fallen by 10 percent since 2000.50 If lawmakers in Idaho want to stop the bleeding, they must move able-bodied adults from welfare to work.
West Virginia’s Medicaid woes
Since 2000, more than 373,000 individuals have been added to the West Virginia Medicaid rolls—an increase of 145 percent, nearly tripling in just over two decades.51-52 Meanwhile, Medicaid spending has nearly quadrupled and now accounts for more than one in every four dollars spent in the state.53-54
During that time, labor force participation rates in West Virginia have declined by only two percent.55 However, that is no cause for celebration, as the state had the second-worst labor force participation rate in the nation in 2023, trailing only Mississippi.56 In fact, West Virginia has consistently had the lowest, or one of the lowest, labor force participation rates nationwide since 2000.57
Without swift action, West Virginia’s Medicaid woes will continue to worsen as the state’s workforce continues to fall behind.
The Bottom Line: Able-bodied adults must be moved from welfare to work to ignite America’s economic comeback.
In just over two decades, unsustainable Medicaid growth has fueled the labor force shortage that is currently handicapping the economy as able-bodied adults have been shifted from the workforce and onto welfare. And while there has never been a better time to return to work, able-bodied adults are opting for welfare applications rather than paychecks.
However, there is still time to salvage the situation and reverse course. To jumpstart the economic comeback that America desperately needs, states must adopt policies that help able-bodied adults move from welfare to work. By doing so, lawmakers would not only preserve resources for the truly needy, but also be part of the solution to the stagnation that is plaguing the nation.
REFERENCES
1 Sam Adolphsen, “There has never been a better time for welfare reform,” Foundation for Government Accountability (2018), https://thefga.org/research/there-has-never-been-a-better-time-for-welfare-reform.
2 Bureau of Labor Statistics, “Job openings and labor turnover—April 2024,” U.S. Department of Labor (2024), https://www.bls.gov/news.release/jolts.nr0.htm.
3 Ibid.
4 Austen Hufford, “Job quitting fell 12% last year—And that’s bad news for the economy,” Wall Street Journal (2024), https://www.wsj.com/economy/jobs/fewer-workers-are-quitting-heres-what-that-means-for-the-economy-82e6c55b.
5 Center for American Political Studies, “March 2024: Harvard CAPS-Harris poll,” Harvard University (2024), https://harvardharrispoll.com.
6 Bureau of Labor Statistics, “12-month percentage change, Consumer Price Index, selected categories,” U.S. Department of Labor (2024), https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm.
7 Centers for Medicare & Medicaid Services, “Medicaid enrollment data collected through MBES,” U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes/index.html.
8 Centers for Medicare & Medicaid Services, “CMS’ program history,” U.S. Department of Health and Human Services (2023), https://www.cms.gov/about-cms/who-we-are/history.
9 Jonathan Bain, “Busted budgets and skyrocketing enrollment: Why states should reject the false promises of Medicaid expansion,” Foundation for Government Accountability (2023), https://thefga.org/research/states-should-reject-false-promises-of-medicaid-expansion.
10 Congressional Research Service, “Overview of the ACA Medicaid expansion,” Library of Congress (2021), https://crsreports.congress.gov/product/pdf/IF/IF10399.
11 Centers for Medicare & Medicaid Services, “Medicaid eligibility,” U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/medicaid/eligibility/index.html.
12 Centers for Medicare & Medicaid Services, “Medicaid expansion & what it means for you,” U.S. Department of Health and Human Services (2024), https://www.healthcare.gov/medicaid-chip/medicaid-expansion-and-you.
13 Kaiser Family Foundation, “Medicaid HCBS waiver waiting list enrollment, by target population and whether states screen for eligibility,” Kaiser Family Foundation (2023), https://www.kff.org/medicaid/state-indicator/medicaid-hcbs-waiver-waiting-list-enrollment-by-target-population-and-whether-states-screen-for-eligibility/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
14 FRED, “Civilian labor force participation rate,” Federal Reserve Bank of St. Louis (2024), https://fred.stlouisfed.org/series/CIVPART.
15 Ibid.
16 Ibid.
17 Ibid.
18 Ibid.
19 Author’s calculations based upon data provided by the U.S. Department of Health and Human Services and the Medicaid and CHIP Payment and Access Commission on Medicaid enrollment, disaggregated by year.
20 Jonathan Bain, “The X factor: How skyrocketing Medicaid enrollment is driving down the labor force,” Foundation for Government Accountability (2022), https://thefga.org/research/x-factor-medicaid-enrollment-driving-down.labor-force.
21 Centers for Medicare & Medicaid Services, “Medicaid enrollment—New adult group,” U.S. Department of Health and Human Services (2023), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes/index.html.
22 In fiscal year 2000, approximately 6.9 million able-bodied adults were enrolled in Medicaid. See, e.g., Centers for Medicare & Medicaid Services, “2018 actuarial report on the financial outlook for Medicaid,” U.S. Department of Health and Human Services (2020), https://www.cms.gov/files/document/2018-report.pdf.
23 Centers for Medicare & Medicaid Services, “Major eligibility group information for Medicaid and CHIP beneficiaries by month,” U.S. Department of Health and Human Services (2024), https://data.medicaid.gov/dataset/ea9b7db3-db71-4663-b4e1-67e11d1d4fcc/data.
24 Centers for Medicare & Medicaid Services, “2018 actuarial report on the financial outlook for Medicaid,” U.S. Department of Health and Human Services (2020), https://www.cms.gov/files/document/2018-report.pdf.
25 Medicaid and CHIP Payment and Access Commission, “Medicaid enrollment by state, eligibility group, and dually eligible status: Fiscal year 2021,” Medicaid and CHIP Payment and Access Commission (2023), https://www.macpac.gov/wp-content/uploads/2023/12/EXHIBIT-14.-Medicaid-Enrollment-by-State-Eligibility-Group-and-Dually-Eligible-Status-FY-2021.pdf.
26 Jonathan Bain, “Busted budgets and skyrocketing enrollment: Why states should reject the false promises of Medicaid expansion,” Foundation for Government Accountability (2023), https://thefga.org/research/states-should-reject-false-promises-of-medicaid-expansion.
27 Food and Nutrition Service, “SNAP work requirements,” U.S. Department of Agriculture (2024), https://www.fns.usda.gov/snap/work-requirements.
28 Congressional Research Service, “Temporary Assistance for Needy Families (TANF) and work requirements,” Congressional Research Service (2023), https://crsreports.congress.gov/product/pdf/IN/IN12150#:~:text=The%20main%20TANF%20work%20requirements,in%20either%20work%20or%20activities.
29 Food and Nutrition Service, “SNAP work requirements,” U.S. Department of Agriculture (2024), https://www.fns.usda.gov/snap/work-requirements.
30 Michael Greibrok, “Congress could boost economy by allowing Medicaid work requirements without bureaucratic intervention,” Foundation for Government Accountability (2023), https://thefga.org/research/congress-boost-economy-allowing-medicaid-work-requirements.
31 Briefing Room, “Executive order on strengthening Medicaid and the Affordable Care Act,” The White House (2021), https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/28/executive-order-on.strengthening-medicaid-and-the-affordable-care-act.
32 Author’s calculations based upon data provided by state Medicaid agencies on the total number of non-disabled, non-elderly adults enrolled in Medicaid and the number of non-disabled, non-elderly adults enrolled in Medicaid who report zero earned income, in both 2019 and 2022. Although data was requested from all state Medicaid agencies, only 23 states had responsive data. Approximately 57 percent of all Medicaid enrollees reside in the 23 states with responsive data.
33 Ibid.
34 Author’s calculations based upon data provided by state Medicaid agencies on the total number of non-disabled, non-elderly adults enrolled in Medicaid and the number of non-disabled, non-elderly adults enrolled in Medicaid who report zero earned income, in both 2019 and 2022, and data provided by the U.S. Department of Health and Human Services on the number total number of non-disabled, non-elderly adults enrolled in Medicaid, disaggregated by state and month.
35 Census Bureau, “QuickFacts Florida,” U.S. Department of Commerce (2023), https://www.census.gov/quickfacts/fact/table/FL/PST045223.
36 Kaiser Family Foundation, “Medicaid HCBS waiver waiting list enrollment, by target population and whether states screen for eligibility,” Kaiser Family Foundation (2023), https://www.kff.org/medicaid/state-indicator/medicaid-hcbs-waiver-waiting-list-enrollment-by-target-population-and-whether-states-screen-for-eligibility/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
37 Author’s calculations based upon data provided by the U.S. Department of Health and Human Services, the Medicaid and CHIP Payment and Access Commission, and the U.S. Department of Labor.
38 Jonathan Bain, “The X factor: How skyrocketing Medicaid enrollment is driving down the labor force,” Foundation for Government Accountability (2022), https://thefga.org/research/x-factor-medicaid-enrollment-driving-down.labor-force.
39 Ibid.
40 Centers for Medicare & Medicaid Services, “Medicaid enrollment—New adult group,” U.S. Department of Health and Human Services (2023), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes/index.html.
41 Nick Samuels et al., “Summer 2001 state expenditure report,” National Association of State Budget Officers (2001), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/NASBO%20StExpRep%202000.pdf.
42 Brian Sigritz et al., “2023 state expenditure report,” National Association of State Budget Officers (2023), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2023_State_Expenditure_Report-S.pdf.
43 FRED, “Labor force participation rate for Missouri,” Federal Reserve Bank of St. Louis (2024), https://fred.stlouisfed.org/series/LBSSA29.
44 Peter Evangelakis et al., “Economic impacts of increased federal funding in Missouri associated with an expansion of its MO HealthNet program,” Missouri Foundation for Health (2020), https://mffh.org/wp-content/uploads/2020/06/MFH-MOHN-Expansion-Federal-Funding-Impact-Report-web2.pdf.
45 Jonathan Bain, “The X factor: How skyrocketing Medicaid enrollment is driving down the labor force,” Foundation for Government Accountability (2022), https://thefga.org/research/x-factor-medicaid-enrollment-driving-down.labor-force.
46 Centers for Medicare & Medicaid Services, “Medicaid enrollment—New adult group,” U.S. Department of Health and Human Services (2023), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes/index.html.
47 Census Bureau, “QuickFacts Idaho,” U.S. Department of Commerce (2023), https://www.census.gov/quickfacts/fact/table/ID/PST045222.
48 Nick Samuels et al., “Summer 2001 state expenditure report,” National Association of State Budget Officers (2001), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/NASBO%20StExpRep%202000.pdf.
49 Brian Sigritz et al., “2023 state expenditure report,” National Association of State Budget Officers (2023), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2023_State_Expenditure_Report-S.pdf.
50 FRED, “Labor force participation rate for Idaho,” Federal Reserve Bank of St. Louis (2024), https://fred.stlouisfed.org/series/LBSSA16.
51 Jonathan Bain, “The X factor: How skyrocketing Medicaid enrollment is driving down the labor force,” Foundation for Government Accountability (2022), https://thefga.org/research/x-factor-medicaid-enrollment-driving-down.labor-force.
52 Centers for Medicare & Medicaid Services, “Medicaid enrollment—New adult group,” U.S. Department of Health and Human Services (2023), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes/index.html.
53 Nick Samuels et al., “Summer 2001 state expenditure report,” National Association of State Budget Officers (2001), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/NASBO%20StExpRep%202000.pdf.
54 Brian Sigritz et al., “2023 state expenditure report,” National Association of State Budget Officers (2023), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2023_State_Expenditure_Report-S.pdf.
55 FRED, “Labor force participation rate for West Virginia,” Federal Reserve Bank of St. Louis (2024), https://fred.stlouisfed.org/series/LBSSA54.
56 FRED, “Labor force participation rate,” Federal Reserve Bank of St. Louis (2024), https://fred.stlouisfed.org/release/tables?rid=446&eid=784070&od=2023-06-01#.
57 Ibid.
