Don't make the poor work for health care

(Image credit: 67photo / Alamy Stock Photo)

published 9 January 2018

The Trump administration just won't learn its lesson. Fresh off some of the most detested policymaking in American history, the White House is about to turn to another unpopular conservative obsession: Work requirements.

Republicans have long argued that too many able-bodied adults are getting a free ride from the government. During the Obama years, they took specific issue with the Affordable Care Act's expansion of Medicaid, the government program that provides health coverage to the poor, which they said benefited lots of adults who should have been working in exchange for help. Indeed, since Medicaid is jointly administered by the federal and state governments, states can apply for waivers to impose work requirements on the program. Nine states did, but the Obama administration always turned them down.

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1. A sizable majority of able-bodied adults on Medicaid already work. Despite ObamaCare's expansion, almost two-thirds of Medicaid's 68 million beneficiaries are still either children, the elderly, or people on disability. Among the remaining adults, 60 percent are already working. The remainder — about 9.8 million people — have good reasons not to be in the workforce. Fifteen percent of them are going to school, and 30 percent are taking care of other family members. Another 36 percent report being too sick or disabled to work, though they haven't qualified for disability benefits (which, it's worth remembering, have a pretty strict threshold). Americans on Medicaid are also far more likely to be in low-wage jobs that involve lots of manual labor, as opposed to desk jobs where something like a back problem might not be prohibitive.

2. There aren't enough jobs. If you're going to require people to work, it seems obvious you need to make sure enough jobs are available. Yet America chronically fails to do this. At the peak of the Great Recession, there were 6.7 job seekers for every available job. Eight years later, that ratio is finally closing in on 1-to-1, but it's still not quite there. More to the point, the ratio rarely gets that low. The last time was a brief period in the late 2000s, just before the stock bubble popped. Furthermore, since government statistics don't account for all unemployed people, the current seekers-to-opening ratio significantly understates the scale of the problem.

3. It will undercut wage growth. In a healthy economy firing on all cylinders, wages generally grow at 4 percent. Right now, they're growing at 2.5 percent, and that's after nearly a decade of recovery from the 2008 crisis. A key culprit is the aforementioned seekers-to-job-openings ratio. If there are more people looking for work than jobs available, employers have all the bargaining power: They can pay people pennies, cut benefits, and get away with demeaning work conditions because workers' only other option is unemployment and destitution.

One under-appreciated plus of any welfare state program is it gives workers a little leverage. For instance, if you know Medicaid will provide you health coverage no matter what, that's one less thing you have to worry about getting through your job or paycheck. It gives you a little more wiggle room to turn down bad job offers — which forces employers to make better offers to attract the labor they need. But slapping work requirements on these programs neutralizes that effect, and adds to the social pressures keeping wages low.

4. It will result in an underfunded and capricious bureaucracy. Any work requirement program also comes with additional red tape: Beneficiaries have to fill out paperwork and jump through hoops, which can be harder for low-income workers with erratic schedules and spotty internet access. Meanwhile, scant bureaucratic resources get stretched thinner working through who does and doesn't qualify for various exemptions. "Able-bodied," for instance, is inherently subjective, and previous work requirement efforts by states suggest a lot of people who shouldn't be denied benefits for not working nonetheless will be.

About 40 percent of all income earned in the economy (that's about $7.4 trillion these days) is income that flows from earning wealth — capital gains, interest, rent, etc. Which is to say, it's income people got without lifting a finger. "Salaries and wages — that is, money paid for work — only make up about 15 percent of the income of Americans making $10 million per year or more," Elizabeth Bruenig wrote at The Washington Post. Yet these numbers never come up when policymakers wring their hands about idleness.

You could argue that people used income they earned from work to buy that wealth. But that doesn't actually hold all that much: Wealth begets wealth, and all that non-work income gives people more room to buy more capital that provides even more non-working income. On top of that, lots of people inherit wealth from parents and family members — a contradiction the GOP just heightened by massively cutting inheritance taxes in their recently-passed tax overhaul.