Leighton Ku
June 2026
In early June, the Centers for Medicare and Medicaid Services (CMS) released interim final regulations for Medicaid work requirements (or “community engagement”), including the required regulatory impact statement. CMS Administrator Mehmet Oz proclaimed “This rule helps Americans build skills and independence through work, education, job training, or community service, creating new opportunities for themselves and their families.”
In many years of reading regulations and regulatory impact statements, I have never seen assessments so untethered from the evidence and misleading to the public. Longstanding federal rules call for “regulatory impact statements” that assess both the benefits and costs, including those that can be quantified and monetized, quantified but not monetized and those that cannot be quantified. Unfortunately, the CMS analysis wildly exaggerates the benefits of Medicaid work requirements, underestimates the harm (or “costs”) and simply ignores how the loss of Medicaid coverage will reduce access to health care and medications, imperil health for needy Americans, harm the nation’s health care providers and damage state economies.
Work Requirements Fail to Improve Employment or Income
The impact statement claims that about 5 million Medicaid beneficiaries (about 34 percent of non-exempt beneficiaries) will engage in work because of the new rules (Tables 42 and 43) and goes on to estimate how this will increase incomes and tax revenues. CMS does not cite any evidence that this is credible.
Where will 5 million new jobs for Medicaid beneficiaries come from? After all, the U.S. created only 181,000 new jobs in 2025. New job growth favors those with higher education and specialized job skills; opportunities for low-income Medicaid beneficiaries are in less demand. It simply is not credible that the work requirements regulation will lead to the creation of millions of new jobs for Medicaid beneficiaries. (As discussed below, the regulation is more likely to cause large job losses, rather than creating new jobs.) If there are not enough new jobs, those who happen to find work due to the new rule could merely displace other workers, causing them to be unemployed instead. Also, the higher supply of labor will depress wages, so that incomes could fall for many workers. If many of those required to comply with work requirements cannot find jobs or other engagement, far more will lose coverage than CMS estimates. The economic gains that CMS conjectured are unrealistic.
In reality, a large body of research, especially studies of work requirements imposed nationally in SNAP or Medicaid work requirements in Arkansas, document that work requirements are unable to significantly increase employment or incomes. (See, for example, Congressional Budget Office, Brookings Institution, Han, Gray et al., Sommers et al., or Gangopadhyaya and Karpman.) In fact, the most consistent effects of work requirements are to cause large proportions of targeted recipients – on the order of 25 to 50 percent -- to lose health or nutrition benefits, creating serious hardship among those with the lowest incomes.
A study by the Office of the Assistant Secretary for Planning and Evaluation, issued in conjunction with the interim rule, claimed work requirements would help 3.3 to 5.8 million gain jobs and lower the number of poor Americans by 1.6 to 2.9 million. But it reached these conclusions using a very selective cherry picking of three studies about welfare-to-work projects, rather than the more relevant SNAP and Medicaid research cited above. Moreover, the projects they cite typically included other work supports, such as job search, subsidized employment, child care or transportation assistance, which are not included in Medicaid work requirements. Economists and health experts like East and McIntyre and Frank and Glied have already dismissed this study as not credible.
Simply imposing work requirements is a short-sighted and fundamentally flawed strategy for addressing problems of unemployment among low-income Americans. There are complex social and structural barriers that impede employment -- including limited education, literacy and job skills, health and behavioral difficulties, problematic job histories (e.g., incarceration), transportation problems, caretaking responsibilities and racial/ethnic discrimination, as well as limited job opportunities. Medicaid and SNAP benefits were designed to reduce hardship among needy Americans because of these intractable social and economic challenges.
Contrary to Dr. Oz’s claim, Medicaid work requirements do not create opportunities for training or education. The rule provides no work supports for training, education, child care or transportation; they only threaten sanctions for those unable to find work. Punishing the poor by eliminating their benefits because they can’t find work does not solve their problems.
Although work requirements are supposed to exempt those whose poor health prevents them from working, these guardrails often fail. Brantley et al. found that those with disabilities also lost SNAP benefits due to work requirements and that black adults were harmed more than white adults. The rigid criteria for medical frailty in the new regulations will fail to protect many Medicaid beneficiaries with serious health problems.
Work Requirements Damage State Economies and Employment
CMS ignores the enormous economic fallout of the massive cutbacks in Medicaid, SNAP and the ACA marketplace under the One Big Beautiful Bill Act. An economic analysis estimates that, in 2029, by cutting $160 billion in federal Medicaid, SNAP and ACA marketplace funding, the legislation would trigger the loss of almost $200 billion in state economies and the disappearance of 1.65 million jobs, roughly half of them in health care. An earlier analysis, completed before the legislation was finalized, found that Medicaid work requirements alone could induce the loss of 322,000 to 449,000 jobs. Most of the recent job growth in the U.S. has been in health care, but Medicaid cutbacks jeopardize this critical sector of the economy.
CMS Undercounts How Many Will Lose Medicaid and How Much Funding Will Be Cut
In addition to exaggerating the benefits of work requirements, CMS lowballs how many will lose Medicaid coverage. It estimates that about 15 percent of those who are not exempt from work requirements will disenroll, about 9 percent because they will not work or go to school and 6 percent due to procedural problems (paperwork hassles), so that 3.1 to 3.3 million lose Medicaid (Tables 40 and 41).
However, the research cited above found that most of those who lose benefits due to work requirements are actually working, in school or should be exempt, but lose coverage because they are unable to navigate the confusing paperwork. CMS recognized that work requirements impose substantial paperwork burdens and estimated that beneficiaries will need to spend two hours every six months simply to comply with the paperwork needed and the value of time they lose would be more than $500 million per year (Table 15). Many will be overwhelmed by these steep paperwork burdens, precipitating deep participation losses.
In comparison, the non-partisan Congressional Budget Office (CBO), as well as RAND, estimated, based on prior research, that 5.2 million people would lose Medicaid because of work reporting. The Urban Institute estimated it could cause between 3.0 to 7.0 million to lose Medicaid, depending on how states implement the policies, use automated data matching and ex parte reviews and permit medical frailty exemptions.
Regrettably, a new element of the interim rule – a much more restrictive approach to determining “medical frailty” – will make it tougher to qualify for exemptions by requiring that applicants must not only demonstrate that they have serious medical conditions, but that they “significantly impair” their ability to work. A report in JAMA Health Forum, based on the views of Medicaid medical directors, concludes that medical frailty determinations should be based on clinical considerations (i.e., diagnoses), rather than the ill-defined concept of “ability to work.” This new requirement will likely increase the number who lose Medicaid coverage, probably exceeding CBO’s or RAND’s estimates of coverage losses.
Based on its underestimate of the number losing Medicaid coverage, CMS goes on to estimate how much Medicaid funding will be cut. But CMS’s estimate of the cut in federal funding due to work requirements is 17 percent less than CBO’s for the period 2027-34 and 31 percent less by 2034; it is also far below RAND’s estimate.
CMS Simply Ignored Other Costs of Medicaid Work Requirements
Rather than being thorough in assessing costs and benefits, CMS chose to obfuscate and mislead. In addition to the overestimates of employment gains and underestimates of Medicaid coverage losses and federal funding cuts, CMS did not even bother to mention other health and social costs.
Consider the loss of access to health care services and medications: I analyzed 2023 Medical Expenditure Survey data and found that Medicaid beneficiaries (who often have serious health problems) average 6.6 medical visits and 12.0 prescription medication fills per year. Based on CBO’s estimate of 5.2 million people losing Medicaid, 34 million Medicaid medical visits and 62 million prescription drug fills are at risk. Even if we assume one-third of these services are still obtained another way, whether through other insurance or charity care, more than 20 million medical visits and 40 million prescription fills could be lost.
This would imperil millions of people’s ability to get care for chronic and acute diseases. Researchers at Yale and the University of Florida estimated that Medicaid work requirements could cause 7,000 to 9,200 preventable deaths per year, as well as hundreds of thousands of cases of uncontrolled diabetes or cardiovascular disease.
By causing so many patients to lose insurance, Medicaid work requirements also threaten the finances of health care providers, especially community health centers and safety net hospitals. If they must close or reduce services, these facilities’ privately-insured or Medicare patients also lose health access, and many staff will lose their jobs.
CMS also ignored the costs of increased burden for health care providers to document medical frailty and each patient’s inability to work, as required by the interim regulation. Medicaid medical directors have described why the ability to work is not the proper basis for medical frailty determination. A health advocate in Nebraska, where Medicaid work requirements were just implemented, described the problem; she "was concerned doctors in the rural state who are already reluctant to take Medicaid patients may stop. ‘They’re already drowning in paperwork, so to require them to do an additional step of certifying whether someone is able to work, I think is concerning.'" One physician has noted that already busy clinicians should be spending their time improving care for patients rather than filling out unnecessary paperwork under the new rules.
The additional documentation burdens could cost an additional $300 million per year. KFF analysts used detailed federal survey data to estimate that 15 percent of Medicaid beneficiaries were unable to work due to illness or disability. Of the 20 million adult beneficiaries in Medicaid expansion states, about 3 million could seek medical frailty exemptions. Primary care providers might need to spend 30 minutes every six months documenting medical frailty and inability to work, or about 3 million person-hours per year. The average compensation for a primary care physician is about $100 per hour, so they could bear $300 million per year in additional costs. Given funding cutbacks under the new legislation, it is questionable whether states or managed care organizations could raise Medicaid reimbursements to account for these burdens. In addition, since medical exemptions must be documented before Medicaid enrollment, millions of applicants might need medical frailty assessments before they are even covered by Medicaid. Many of these costs would ultimately be borne by health care providers without reimbursement.
Conclusion
Rather than thoroughly assessing the costs and benefits in the regulatory impact statement of its interim final regulation, CMS fancifully concocted analyses that wildly overstate the benefits, undercount the costs and utterly ignore other critical costs and harm of Medicaid work requirements.