Will the New Medicaid Rules on Work Increase Vermont's Workforce? Not a Chance
For a state already grappling with a shallow labor pool and an aging population, the new rules are poised to create more barriers than bridges to employment.
Vermont's Workforce Crisis Braces for New Threat as Federal Bill's Rules Mismatch State's Needs
MONTPELIER – Vermont is in the grips of a severe workforce shortage, a challenge straining businesses and essential services across the state. With one of the nation's lowest unemployment rates and a sea of "Help Wanted" signs, the state is desperate for more workers. Yet, a sweeping piece of federal legislation, ironically dubbed the "One Big Beautiful Bill," is on a collision course with Vermont's economic reality, threatening to exacerbate the very problem it purports to solve.
The bill, a massive reconciliation package, proposes a host of changes to the nation's social safety net, including stringent work requirements for Medicaid recipients. While proponents in Washington tout these measures as a way to boost the workforce and cut down on fraud, an examination of the bill's provisions and Vermont's unique economic landscape reveals a starkly different picture. For a state already grappling with a shallow labor pool and an aging population, the new rules are poised to create more barriers than bridges to employment, with a devastating impact on thousands of Vermonters' health and financial stability.
A Solution in Search of a Problem
At the heart of the "One Big Beautiful Bill" is a national mandate that would require certain Medicaid recipients to document 80 hours of work, community service, or job training each month to maintain their health coverage. On the surface, this may seem like a reasonable expectation. However, the reality of who is on Medicaid and why tells a different story.
National data from the Kaiser Family Foundation provides a clear snapshot of the situation. According to a 2023 KFF analysis, 64% of non-elderly adult Medicaid beneficiaries are already working either full or part-time. Of those who are not working, the majority are dealing with a personal illness or disability, are caregivers for a family member, or are in school.
A recent report from the Center on Budget and Policy Priorities calls the narrative that Medicaid is full of able-bodied adults who are choosing not to work a "damaging fiction," noting that the data consistently shows that people who can work are working, often in low-wage jobs that don't offer employer-sponsored health insurance. This is particularly true in Vermont, where industries with the highest demand for workers—including healthcare, social assistance, and accommodation and food services—are also sectors where low-wage jobs with limited benefits are common. The state's Department of Labor has consistently reported a high number of job openings, with a recent report indicating 17,000 unfilled positions. The problem, according to state economic data, is not a lack of available jobs, but a lack of available workers.
A Cautionary Tale and Crippling Costs
The proposed work requirements are not only a mismatch for the state's needs; they are also a bureaucratic nightmare in the making. The experience of states that have experimented with similar work requirements offers a cautionary tale. In Arkansas, a work requirement for Medicaid recipients led to over 18,000 people losing their health insurance in just a few months. Crucially, a study published in the New England Journal of Medicine found no significant increase in employment among the target population. Instead, the primary outcome was widespread confusion and a loss of coverage for eligible individuals who struggled to navigate the complex reporting requirements.
The administrative burden on the state would also be immense. Vermont's Agency of Human Services would be tasked with creating and managing a massive new system to track the work activities of thousands of individuals, a costly and complex undertaking that would divert resources from other critical programs.
The overall impact of the "One Big Beautiful Bill" on Vermont extends far beyond the misguided work requirements. The legislation also includes deep cuts to Medicaid funding.7 An analysis by the Urban Institute estimates Vermont's hospitals would be hit with an estimated $1.7 billion in cuts over the next decade. This could lead to service reductions and even hospital closures, particularly in rural areas, for a state where approximately one in four residents relies on the program for their health coverage.
Senator Peter Welch has been a vocal critic of the bill, warning that the legislation is "a significant threat to the well-being of the health care system we have here in Vermont." According to the Senator, the cuts to Medicaid would not only harm individuals but also threaten the financial stability of the state's entire healthcare infrastructure.
For a state that prides itself on its strong sense of community and social responsibility, the "One Big Beautiful Bill" represents a direct assault on the values that define Vermont. The bill's proponents may promise a more robust workforce and a leaner government, but the evidence strongly suggests a different outcome for the Green Mountain State: a sicker, poorer, and more economically stressed population. As Vermont continues to grapple with its workforce crisis, this federal legislation stands not as a helping hand, but as a heavy blow to the state's already fragile economic and social fabric.