The Cost of Conditioning Care on Work 

By Bella Castro. 

Introduction 

Medicaid work requirements have reemerged as a central feature of federal and state health policy, promising efficiency and workforce engagement, while threatening access to care for millions of low-income Americans. After the One Big Beautiful Bill Act of 2025 (“OBBBA”) passed, states face federally mandated eligibility conditions that will reshape Medicaid administration nationwide. This blog examines how those mandates intersect with Arizona’s proposed work requirements for Arizona Health Care Cost Containment System (AHCCCS) enrollees, drawing on evidence from prior state experiments. In doing so, it highlights what Arizona can realistically expect as these policies move from theory to practice. 

Basics of Medicaid 

Medicaid is the nation’s primary public health insurance program for low-income individuals and families, covering adults and children from low-income households, as well as people of all ages with disabilities. It is also the largest public health insurance program in the United States, providing coverage to more than 80 million people. Although Medicaid is jointly funded by the federal government and the states, so each state administers its own program within federal guidelines. As a result, eligibility standards, covered benefits, and administrative requirements can vary significantly from state to state. 

The Patient Protection and Affordable Care Act (“ACA”) massively expanded Medicaid coverage. Through the ACA’s Medicaid expansion, forty-one states (including the District of Columbia) extended eligibility to nearly all adults with incomes up to 138% of the federal poverty level––approximately $21,597 per individual in 2025. This expansion dramatically increased access to health insurance, with more than  twenty-one million people gaining coverage. Today, over forty-five million Americans have health insurance as a direct result of the ACA’s coverage provisions, underscoring Medicaid’s central role in the nation’s health care system.

This structure—federally guided but state implemented—has made Medicaid both expansive and vulnerable. Policy changes at the federal level can have sweeping consequences for states and enrollees alike, particularly when those changes affect eligibility conditions.   

The One Big Beautiful Bill Act

Against this backdrop, the OBBBA represents a significant shift in federal Medicaid policy. Signed into law on July 4, 2025, the massive budget reconciliation bill contains substantial funding reductions and policy changes affecting both Medicaid and Health Insurance Marketplaces. Among its most consequential provisions are new administrative conditions imposed on individuals seeking to enroll in or maintain Medicaid coverage. 

Central to these changes are newly mandated work requirements. Under the OBBBA, states must implement an 80-hour-per-month work requirement for adults aged nineteen to sixty-four who are eligible for Medicaid through the ACA expansion. To maintain coverage, enrollees must document participation in qualifying activities such as employment, education, job training programs, or community service. While framed as a means of promoting workforce participation, these requirements add layers of administrative complexity for both beneficiaries and state agencies. 

The Congressional Budget Office estimates that over 5.3 million people will lose access to their health insurance as a result of these new requirements. For states, particularly those that expanded Medicaid under the ACA, the OBBBA raises critical questions about administrative capacity, coverage losses, and the broader public health and economic effects of conditioning health insurance on work. 

Arizona’s Work Requirement

Arizona administers its Medicaid program through the Arizona Health Care Cost Containment System, commonly known as “AHCCCS.” As of 2024, approximately 2.17 million Arizonans, nearly 29% of the state’s population, were enrolled in Medicaid. AHCCCS provides a broad range of essential health services, including doctor visits, hospital stays, prescriptions, maternity care, behavioral health, and dental services for children. For many low-income Arizonans, AHCCCS is the primary gateway to preventative care and ongoing treatment necessary to remain healthy and employed. 

Despite the program’s scale and importance, Arizona policymakers recently sought to condition continued Medicaid eligibility on work-related activity. Specifically, the Arizona Legislature pursued an amendment to the state’s Section 1115 waiver that would impose work requirements on adults covered through the Medicaid expansion. The proposal also introduces a five-year lifetime cap on Medicaid coverage for individuals subject to the work requirement. Under the plan, affected enrollees would be required to verify compliance on a monthly basis by reporting qualifying activities for at least twenty hours per week. 

Supporters of these work mandates frame them as a common-sense solution to encourage employment and prevent misuse of public benefits. However, evidence from prior state experiments suggests that these requirements are unlikely to achieve those goals. Research consistently shows that most individuals subject to Medicaid work requirements are already working, caregiving, enrolled in school, or unable to work due to health-related limitations. For those who are not working, the loss of health coverage does little to address the underlying barriers—such as unstable employment, disability, or lack of access to transportation—that prevent sustained workforce participation. 

Arkansas’s experience with Medicaid work requirements during the first Trump administration offers a cautionary example. Before the policy was halted by the courts, more than 18,000 Arkansas residents lost Medicaid coverage in just five months. Many of these coverage losses were not the result of failing to meet work requirements, but rather the inability to navigate complex reporting systems. Enrollees struggled with online portals, lacked reliable internet access, or were unaware of new administrative obligations. Others had chronic health conditions or disabilities that required consistent medical treatment to remain employed; when the state terminated coverage, they lost access to care, making continued work even more difficult. 

Low-wage workers were particularly vulnerable. Fluctuating work schedules, employer-imposed hour reductions, and limited public transportation made it difficult to consistently meet rigid hourly thresholds. Rather than increase employment, the policy undermined it. Studies following Arkansas’s experiment found no measurable increase in workforce participation, while demonstrating significant coverage losses and downstream health consequences. In practice, Medicaid work requirements functioned less as a pathway to employment and more as an administrative barrier to care––one that ultimately ran counter to the stated goal of promoting economic stability. 

So what does this mean for Arizona? 

Arizona’s proposed work requirements should be understood not as a theoretical policy experiment, but as a preview of what the OBBBA now requires states to confront. The OBBBA’s federal mandates will effectively force Arizona to operationalize the same administrative structures that have already proven harmful elsewhere, magnifying their impact across a much larger population. For AHCCCS enrollees, this means heightened reporting obligations, increased risk of procedural disenrollment, and a real possibility of losing coverage despite continued eligibility in substance. For the state, it signals rising administrative costs, reduced flexibility in program design, and predictable coverage losses among working adults, people with disabilities, and low-wage workers navigating unstable employment. If Arkansas’s experience is any guide, Arizona should expect that work requirements will not increase employment but instead sever access to healthcare for thousands of residents––ultimately undermining public health, workforce stability, and the very economic goals these mandates purport to serve.