Employment Instability and Compliance Burden In Medicaid: Implications for One Big Beautiful Bill Act Implementation

Background and Purpose: Starting January 1, 2027, the One Big Beautiful Bill Act (OBBBA) requires individuals who receive Medicaid to spend at least 80 hours per month working or participating in community service, education, or job training activities unless they meet one or more conditions for an exemption. Nearly two-thirds of Medicaid enrollees are working (Tolbert et al., 2025) and many others qualify for work exemptions, so it seems compliance should not be a problem. Yet 18,000 Medicaid enrollees in Arkansas lost their coverage in 2018 following the imposition of work requirements even though an estimated 95% of enrollees met work requirements or met one or more conditions for an exemption (Chen & Sommers, 2020; Sommers et al., 2019). Complying with work requirements – one type of administrative burden (Herd & Moniyhan, 2019) - may be especially challenging for workers in unstable situations, such as temporary or “gig” work. In this study, we examine problems low-wage workers have in complying with Medicaid requirements in relation to employment stability.

Methods: Data for this study are from three waves of a survey administered in 2023 and 2024 with a nationally representative sample (N=2,426) of U.S. households with lower-wage workers from the AmeriSpeak panel. We produced transition matrices to examine employment stability (i.e., having the same employment status) across three time points and fixed effects regression models to predict the probability that workers experienced difficulties in complying with Medicaid requirements (i.e., difficulty providing required paperwork and documentation) in relation to employment stability.

Results: Having a household member with a disability (p < .001), being self-employed (p < .01), and having unstable employment (p < .05) all predicted higher probabilities of experiencing Medicaid compliance burden. Unstable employment was also a statistically significant predictor for four other types of Medicaid administrative burden. Shapley-Owen Decomposition results indicated relative contributions to R-squared for disability (14%), unstable employment (7%) and self-employment (6%). Also, occupation accounted for 9% of variation. Yet state of residence (41%) had the greatest contribution.

Conclusions and Implications: Many low-wage workers already experience problems complying with Medicaid paperwork and documentation requirements, especially if a household member is living with a disability and/or they are self-employed or have unstable employment. These difficulties will worsen with new OBBBA work requirements unless states are proactive in making it as easy as possible for applicants and enrollees to document work effort, especially those who are self-employed and cannot produce paystubs. Failure to do so will result in unnecessary disenrollments with no effects on employment - as was the case in Arkansas – both undermining a key objective of OBBBA and rolling back coverage gains under Medicaid expansion via the Affordable Care Act (ACA).