The New York Times has a nice front-page look at a situation in which Medicaid recipients get better health care coverage than people who pay for private insurance, and how that breeds resentment and creates perverse incentives. The Medicaid recipient profiled in the story is an aspiring opera singer: "to supplement the scant income she gets from singing gigs, she drives for Uber and Lyft a few nights a week, sometimes more, in Boston. She earned about $15,000 last year, making sure she stayed under the threshold to qualify for Medicaid."
You might think Uber, with its reported $48 billion valuation, could afford to make employer-provided health insurance available to its employees, but it's hard to compete with the deal Medicaid is offering, and the cost of private insurance would end up getting reflected in either higher prices for customers, lower cash wages for drivers, or lower eventual profits for shareholders.
In any event, these benefit phase-outs have the effect of discouraging recipients from working more and earning enough money so that they no longer qualify for the benefits. That's not a great dynamic. Earlier coverage of this issue at FutureOfCapitalism is here, here, and here. One inspiration for the Times article is that some Republican governors are getting ready to tackle the issue by attempting to impose work requirements on able-bodied Medicaid recipients. When Bill Clinton did this with welfare, the rolls shrank. It'll be interesting to see whether the same thing happens with Medicaid, especially in the current low-unemployment environment.