Though the official deadline is still months away, on May 1 Nebraska became the first state to implement the Medicaid work requirements that are part of the Trump administration’s One Big Beautiful Bill. Given the state’s move, it is worth examining who stands to gain from the new bureaucratic systems that must be created to comply with the law.
The likely immediate effects in Nebraska will be familiar. Recent research from the Urban Institute found that around 25,000 people are expected to lose Medicaid coverage. This is the most obvious effect of work requirements, as CEPR noted last year:
There is a wealth of research documenting that Medicaid work requirements are unsuccessful in increasing employment. But they are effective at doing something else: Unenrolling people who are eligible for Medicaid. In other words, more paperwork and less healthcare. The Congressional Budget Office analyzed previous bills that institute work requirements and found they would have led many to lose coverage with “no change in employment or hours worked”.
Given that Nebraska’s 3.1 percent unemployment rate is one of the lowest in the country, it is hard to imagine that Medicaid recipients who are not already working will find it easy to find a job.
Work requirements mostly do not put people to work, but they do reduce benefits largely due to the creation of additional administrative burdens. And the creation of these systems – designed to check eligibility and the like – is an enormously complicated and expensive undertaking. The most famous recent example was Georgia’s Pathways to Coverage program, a Medicaid work requirement which spent considerably more on administration than on providing health care. Much of the administrative work was contracted out to Deloitte Consulting, which designed the program and ran various multi-million dollar marketing campaigns to promote enrollment.
Will the rollout of Medicaid and SNAP work requirements follow the same pattern, where private consultants are awarded massive contracts to create new bureaucratic systems? KFF recently evaluated contracts drawn up for five states, and the costs could amount to close to $50 million – money that is going to companies like Deloitte. In Iowa, KFF notes that the contractor estimated that introducing a system to verify work status would cost $7 million; but just a few months later, their estimate to create a system to comply with the One Big Beautiful Bill had increased to over $20 million.
Given that similar programs will need to be created in dozens of states, it stands to reason that work requirements will be a boon to the private consultants, with much of that money coming from the federal government. After all, it costs quite a bit of money to take health care coverage away from people.
This first appeared on CEPR.
