What agencies must know about House-passed Medicaid cuts

What's in the House bill?

The House bill has a number of provisions that experts predict will limit coverage for certain populations, ultimately impacting Medicaid agencies' and hospitals' bottom lines.

Perhaps most notable are the federal Medicaid work requirements codified in the House version of the bill.

The legislation states that all state Medicaid agencies must now require all enrollees ages 19-64 to participate in qualifying activities for at least 80 hours each month. Qualifying activities include work, community engagement or employment training. There are some exceptions for childcare and folks with certain disabilities.

Data has shown that most Medicaid enrollees who can't work already do. According to an April 2025 report from the Urban Institute and Robert Wood Johnson Foundation, 9 in 10 Medicaid expansion enrollees ages 19-55 already work, participate in work-related activities or meet exemption criteria.

Per a May analysis from the Commonwealth Fund, 64% of adults on Medicaid already work full or part time, while another 12% care for dependents, another 10% are disabled or in poor health and 7% attend school. That shakes out to just 8% of enrollees who are not working or unable to find work.

The final House language moved up the timeline for Medicaid work requirements to no later than December 31, 2026.

The House-passed bill also gets rid of temporary incentives for states that newly adopt Medicaid expansion, effective January 2026. That, plus other provisions reducing the expansion state match rate for states that provide coverage, even from a state's own funds, to undocumented immigrants, are designed to cut the cost of the Medicaid program.

Other provisions would affect cost-sharing for adult enrollees, require eligibility checks every six months, delay disproportionate share reductions through September 2028, require that 1115 demonstration waiver projects be budget-neutral and limit retroactive coverage from 90 days to one month from application for coverage.

State Medicaid agencies stare down financial woes

The bill's ultimate intention is to reduce the cost of the Medicaid program, Norris stressed. Although the legislation still needs to pass through the Senate, where it could undergo changes, the reality is that state Medicaid agencies will need to start making choices about where their money goes.

"The ultimate goal of this bill is to pretty significantly reduce federal Medicaid funding," Norris asserted. "There's no way around that fact. What that results in for states is either increased state costs or a reduction in eligibility or benefits."

States have a few options: they could reduce the number of people covered under the program, cut the benefits they offer or offset the shortfall in federal funding with their own money.

"States can start looking at that in their legislatures and their budget to see if there's any wiggle room for additional funding," Norris advised. "And if there isn't, they must start having those conversations about how they make up for the fact that their federal Medicaid funding will be less in a few years."

While state Medicaid agencies work to understand how provisions affect their finances and operations, the beneficiary is another stakeholder to consider. States and their Medicaid agencies face the dual task of adjusting to a new financing landscape and communicating serious coverage changes to their enrollees.

Norris said the unrolling of pandemic-era Medicaid coverage might serve as a blueprint for this work.

Lessons learned from pandemic disenrollment

Perhaps the best example of using COVID Medicaid disenrollments as a proving ground for upcoming changes to the program is the federalized work requirements, Norris offered. As noted above, most Medicaid beneficiaries either already fulfill these requirements or would be exempt from doing so.

Still, experts predict the work requirements could cut Medicaid coverage for anywhere from 4.6 to 5.2 million adults.

"The work requirements would be a big chunk of the coverage losses because of the documentation required," Norris noted. "We have seen this before when Arkansas implemented a work requirement in 2018. It was only in effect for a few months, but it still resulted in a lot of people losing coverage, most of whom were working. They just either didn't understand or didn't know how to document their work."

Most healthcare policy wonks expect history to repeat itself with the work requirements recently passed in the House bill.

However, Norris said some state Medicaid agencies could ease the reporting process and communicate with affected enrollees more effectively with an automated system, similar to how many did during the COVID-era Medicaid disenrollments.

"Some states have really good systems that work well for automating verification of enrollees' information and other states do not," Norris said. "If the state could do something like that and have verification automatically pulled showing that a person has, say, a paycheck every two weeks coming in, that would help to expedite the process and eliminate people getting dropped off for failure to comply with reporting requirements."

"But that's just really going to depend on the infrastructure that a state has in place and how willing the state is to make all those systems work together," she added as a caveat. "The thing is, in order to create a good, solid automated system, you have to invest the money in that upfront and states are at different places right now."

There's also a roadmap for the beneficiary engagement necessary to support a transition to Medicaid work requirements, Norris added, although processes like this are hardly ever perfect.

During the COVID Medicaid unwinding process, many states adopted a mail-in approach for communicating with beneficiaries who needed to recheck their eligibility. Using brightly colored envelopes was key for capturing the attention of readers, Norris said.

However, states can't rely on mail for beneficiary outreach. During pandemic Medicaid disenrollment, there proved little option for follow-up when agencies got mail returned-to-sender. Where applicable, states should instead work to automate their beneficiary rolls to assess who might be affected by work requirements and automate outreach from there.

Looking ahead, there's a lot of opportunity for partnership with the provider community and managed care organizations. Patients tend to trust their providers, making them good messengers of potential changes in an insurance plan.

Moreover, providers themselves have something to lose in terms of Medicaid cuts.

Partnering with hospitals

It's perhaps an obvious conclusion that hospitals and health systems will be financially impacted by Medicaid cuts. Because Medicaid is a healthcare payer, fewer enrollees means there will be fewer individuals able to access care and the potential for a rise in uncompensated care.

This is of particular concern for rural hospitals and safety-net organizations that treat a disproportionate share of Medicaid enrollees, Norris noted.

But it's not just about the number of enrollees going down. Certain provisions tucked into the bill that are intended to cut the overall price tag of Medicaid could also adversely affect hospitals. For example, the provision to reduce the backdate of Medicaid coverage from 90 days to one month could leave hospitals or providers with higher uncompensated care costs.

"Say there's a person who had a hospitalization two months ago and they're just now getting around to getting their Medicaid straightened out," Norris offered as an example. "If it gets approved and retroactively implemented, then the hospital gets paid. If it doesn't, the hospital is left holding the bag."

Medicaid agencies need to increase their communication with hospitals and other providers they contract with as they assess potential changes to the Medicaid landscape. Open lines of communication will help both parties work together to ease changes, support beneficiaries and protect the organization's bottom line.

"I do think utilizing partnerships with managed care organizations was important and will be important for this, as well," Norris said, especially in terms of getting payer, provider and enrollee on the same page.

However, the potential for significant Medicaid cuts offers yet another use case for technology and automation, so long as the state has enough time to invest in the tools.

"The best strategy will probably be automating as much as possible and then trying to be strategic and creative with how they get the message out to people where it can't be done automatically," Norris concluded.

Sara Heath has reported news related to patient engagement and health equity since 2015.