a. Medicaid Applicants and Beneficiaries Subject to the Community Engagement Requirement
Employment is recognized as an important factor in long-term beneficiary health and welfare. Existing research indicates obtaining and maintaining stable employment provides individuals with reliable income and financial stability, which in turn supports access to safe housing, nutritious food, and other resources necessary for maintaining health. [ 135 136 ] Additionally, research suggests the relationship between health and employment is intrinsic—and bidirectional in nature, so negative benefits may be experienced by some coverage-losing individuals—as mentioned earlier in section I.B. [ 137 138 139 140 ]
We believe a well-designed community engagement requirement may benefit individuals so that they are not dependent, demoralized, or stuck in situations that hinder their economic, physical, and mental state.
Work also creates value in the marketplace by adding to the aggregate production of goods and services, which is why employers pay for it. On an hourly basis, the value is described as the hourly marginal product of labor (MPL). MPL is often proxied by average hourly worker compensation before taxes and fringe benefits are subtracted, although MPL can exceed hourly compensation to the extent that labor or product markets are not competitive. That is, average hourly compensation has a tendency toward underestimating the expected benefit of an additional hour of work in the form of valuable goods and services produced.
Recognizing that most adults do not participate in Medicaid, and that Medicaid participants likely have earning potential below the population average and median, our estimate begins with measurement of the 25th percentile weekly earnings of full-time wage and salary workers of $838 in the first quarter of 2026. [ 141 142 ] We divide this weekly rate by 40 hours to calculate an hourly pre-tax pre-benefit wage rate of $20.95. We then scale up by a factor of 1.186 to account for fringe benefits not already included in the $838, arriving at an hourly MPL of $24.84. [ 143 ] This is intended to represent the productivity of the average Medicaid beneficiary induced to work, rather than the average or median worker working for a company, non-profit, or government agency that may spend time on clerical aspects of this rule.
Some of the beneficiaries are expected to fulfill the community engagement requirement by community service, work program participation, or an educational program (often expected to enhance pay in the future) rather than paid work. The fact that such activities may not be paid does not negate their social benefit. Indeed, they could be more valuable than work for those who select them. This RIA values each hour of non-paid community engagement activities at the same $24.84 as paid work.