Work requirements are the best way to reduce dependency and increase incomes

Work requirements are the best way to reduce dependency and increase incomes

Exploding welfare enrollment is one of the largest challenges facing states today. Since 2000, the number of people dependent on Medicaid has more than doubled and the number of able-bodied adults on the program has nearly quadrupled. As a result, total Medicaid spending has skyrocketed, almost tripling from $206 billion in 2000 to nearly $600 billion today. 

Even worse, Medicaid spending is now consuming nearly a third of state budgets, leaving fewer and fewer dollars to spend on education, infrastructure, and law enforcement. It’s clear that the current path is unsustainable; states need options to rein in spending, relieve taxpayers, and reserve resources for the truly needy. And the answer is work.

In 2011, Kansas Governor Sam Brownback instituted new sanctions in his state’s cash assistance program for able-bodied adults who refused to meet work requirements. But the Brownback administration didn’t just implement the reform and move on — they tracked the impact so they could see what happened to these individuals once they left welfare. Three key results should inspire policymakers in other states and in Washington D.C. to expand work requirements to able-bodied adults in as many programs as possible.

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First, able-bodied parents who left welfare more than doubled their incomes.

 

After reform, Kansas families who left cash assistance saw their incomes increase by an average of 104 percent within just one year. In real dollars, these families were earning $20 million more after regaining their independence than they were making on welfare. Over time, their incomes continued to increase, eventually more than tripling within four years of leaving dependency. 

Secondly, these higher incomes left these now-independent families better off than they were before.

Kansas families who left welfare not only saw an increase in gross earnings, but their financial status improved on net, even after accounting for lost welfare benefits. By the end of the tracking period, these families were earning over $26 million more than they were on welfare, leaving them better off than when they were stuck on welfare.

Finally, enrollment in cash assistance plummeted, freeing up more resources for the truly needy.

After welfare reform in Kansas, cash assistance dependency dropped dramatically. Just before reform, total able-bodied enrollment was above 12,500. But after, enrollment plummeted, sitting at just 2,802 today — a drop of nearly 78 percent. Nationally, over that same period, adult enrollment has declined just 14 percent. The practical effect of this is simple: more resources are now available for the truly needy.

So, what lessons can policymakers draw from these findings?

Work requirements work. They reduce dependency and save taxpayers money. They free up limited dollars for the truly needy. They help individuals who would otherwise remain trapped in welfare get back into the labor force and increase their incomes. They help individuals earn more than they were earning before, including lost welfare benefits.

But states are hamstrung. Even though cash assistance and food stamps require work for certain populations, work requirements have never been allowed in Medicaid. If a state wants to pursue it, they’re forced to endure a lengthy and complicated waiver process, begging Washington for permission to implement these commonsense measures.

Thankfully, several states are willing to tackle the issue anyway. States like Wisconsin, Arkansas, Kentucky, Ohio, and others are moving forward with Medicaid work requirement waiver requests. And the Trump administration has been forthright about their eagerness to approve them. It’s only a matter of time before work is a staple of the Medicaid program.

But when nearly half the cost is coming out of their budgets, states should have significantly more flexibility to shape these programs—and the process should not be so difficult.

Even right now, as Congress debates ObamaCare repeal and the Graham-Cassidy replacement plan, work requirements should remain a top priority. Because, as the Kansas experience shows, work matters. Without it, enrollment will continue to climb, taxpayers will continue to be squeezed, and the truly needy will be robbed of limited resources.

If Congress is serious about reversing the decades-long welfare surge, they must ensure that work requirements are a part of Medicaid going forward.

Nic Horton is research director for the Foundation for Government Accountability, a nonprofit group working to promote limited government.