States are voicing frustration with the Trump administration’s new protocol for implementing Medicaid work requirements, calling the federal decisions a shift that imposes significant burdens on their programs.
The Trump administration’s June 1 rule for implementing work requirements for Medicaid recipients goes beyond what Congress required of states and is inconsistent with guidance the government offered over the past year on who qualifies for coverage under the federal program, some states said.
Republicans last year passed a sweeping tax and spending law that included mandatory work requirements for Medicaid beneficiaries to be overseen by states. Among the provisions in the rule are directives for who qualifies for an exemption from the 80-hour work mandate due to medical frailty, a shift expected to exclude more people from coverage and increase burdens on the states overseeing care.
The changes throw a wrench into states’ plans to operationalize their work-requirement exemptions. Last year’s law offered carve-outs for Medicaid beneficiaries suffering disabilities, debilitating medical conditions, or substance use disorders, but did not specify what level of disability would qualify.
“I think what’s different than what states were expecting was that not only do they have to have one of those statutory exceptions, but they also have a functional impairment that would actually prevent them from being able to work,” said Kody Kinsley, an analyst and former secretary at the North Carolina Department of Health and Human Services.
“I believe that to be significantly more than what was expected,” he said on a press call this week.
The new implementation directive comes at a contentious time between states and the US government over how to handle federal health programs, as the Trump administration scrutinizes fraud and spending.
While the Republican law could ultimately save more than $911 billion in reduced Medicaid payments over a decade, it may also cost more than 14 million people their health coverage by 2034. States, meanwhile, are bracing to offset the reduction in federal funding, weighing things such as tax increases and spending cuts.
The interim final rule comes months ahead of the January 2027 deadline for states to implement the work mandate.
In initially reviewing the nearly 400-page Trump directive, the Oregon Health Authority said the “rules differ significantly from the guidance that we had been operating under” and may cause the state agency to “rework and reprogram” a number of IT systems and set back its progress on implementation.
“People are at risk of losing coverage, not because they aren’t eligible, but because of a paperwork mishap. Forcing people through more paperwork and lengthy processes produces unnecessary churn on and off Medicaid and raises administrative costs for providers, individuals, and the state,” OHA said in a statement.
‘Increased Administrative Burdens’
California also voiced concerns over the implementation changes.
The state has been a target of the Trump administration over allegations it failed to crack down on alleged fraud occurring within its Medicaid program. In May, Vice President JD Vance announced the deferral of over $1 billion in Medicaid reimbursements.
Regarding the rule, the California Department of Health Care Services said it was “concerned about increased administrative burdens and the real risk that eligible people, particularly those with serious and complex medical needs and disabilities, could lose coverage and access to essential care.”
In a statement to Bloomberg Law, the California DHCS described shifts in the medical frailty exemption as “a significant concern.”
“Serious conditions like cancer, end-stage renal disease, or Parkinson’s disease do not automatically qualify unless the severity of the condition significantly impairs their ability to meet the requirement. This is a departure from previous federal direction,” California DHCS said.
Pennsylvania is also wary.
Previously, state officials warned that the spending law’s provisions could remove roughly $20 billion from the state Medicaid program over the next decade. Gov. Josh Shapiro (D) has proposed upping funding by over $1 billion to the state’s Department of Human Services.
The new Trump rule “differs significantly from its previous general guidance and will create significant administrative and resource burdens,” Pennsylvania Department of Human Services press secretary Brandon Cwalina said.
It will also “make it much harder to determine if an individual must meet the community engagement requirements,” Cwalina said. “This will require a significant shift in course with just months to go until these rules take effect.”
Maryland’s Department of Health took a similar tone, noting in a statement that “the guidance is extremely complex, creates additional administrative requirements and leaves many questions still unanswered–all as implementation deadlines loom near.”
Efforts Underway
Some states opted to get ahead of the January deadline for work requirement implementation.
Among them is Nebraska, which rolled out its requirements in May. The state’s Department of Health and Human Services said it was reviewing the rule to determine potential impact.
Sarah Maresh, healthcare access program director at Nebraska Appleseed, a group that does outreach with residents and has met regularly with state officials on the rollout, said the new rule adds “more punitive and burdensome restrictions beyond what Nebraska has implemented,” particularly around the medical frailty definition.
“The rule is going to require people with those serious medical needs and disabilities to prove their condition makes them unable to work to qualify for an exemption, which is not how our system is operating in Nebraska,” Maresh said.
Ultimately, as the January deadline nears, states will be working to align their programs with the new rule.
“States have been building in one direction,” said Allison Orris, senior fellow and a policy director at the Center on Budget and Policy Priorities. “The interim final rule represents a pretty big pivot that states are now going to have to deal with.”